Scotland's Youth on the "Downward Escalator": More Than Half Living Beyond Their Means

This article was first published in The Scotsman's Scotsman Money supplement, 1st March 2025.

Youth unemployment across the UK has hit 16.1% - the highest level in more than a decade. Former health secretary Alan Milburn, leading the government's review into youth economic inactivity, warned of young people trapped on a "downward escalator" of poor health, poor education, and graduating "into the benefits system."

Anonymous data aggregated from Scottish bank accounts, published in Smart Data Foundry’s (SDF) monthly Economic Wellbeing Explorer, reveals the impact of un- and under-employment on young people’s finances. In Scotland, 54% of 18-39 year-olds are now living beyond their means (spending at least 20% more than their incomes); half of young people in Scotland are regularly struggling to make ends meet – and that has long-term consequences.

The Full Scale of the Crisis

While headlines focus on unemployment rates, SDF’s latest update reveals economic fragility across the entire young adult population:

• 54% of 18-39 year-olds are living beyond their means (spending 120% or more of their income)

• 24% are regularly overdrawn (using credit just to cover basic costs)

• In West Central and Eastern Scotland, it's worse: 56% can’t make ends meet.

This means the majority of young adults in Scotland - whether employed, unemployed, or in education - are in economic distress. Having a job is no longer a reliable route to financial resilience.

What "Living Beyond Your Means" Actually Looks Like

The 54% figure isn't about frivolous spending. A typical 27-year-old in Glasgow earning £26,000: rent £750, council tax £120, utilities £100, phone £50, transport £150, food £200. That's £1,370 of £1,803 take-home pay, leaving £433 for everything else.

After accounting for things like a gym membership and socialising, it only takes some unexpected or one-off costs such as one car repair (£400), one replacement coat (£80), and one friend's wedding (£150), and they could easily be spending 125% of income that month. Multiply across a year - birthdays, Christmas, insurance - and staying within income becomes nearly impossible – never mind saving for the future.

The 24% who are regularly overdrawn aren't being irresponsible; it’s an inevitable gap between income and essential costs.

What It Means

More than half of young adults in Scotland are spending more than they earn. This isn't sustainable individually, and it's not sustainable as a society.

It means the majority cannot build emergency savings or save for home deposits. Many will delay or avoid having children. Debt is accumulating across an entire generation. When economic shocks hit, young adults will be hit hardest and recover slowest.

Scotland's overall unemployment rate of 3.8% looks manageable. Youth unemployment at 16.1% looks serious. But combine that with 54% of young adults living beyond their means, and a significant proportion of young people in Scotland are in acute economic distress; either without work, or in work that doesn't cover their costs.

The Escalator Keeps Moving Down

As Milburn noted, young people are usually "the first to be hit by an economic downturn, but then it bounces back." The banking data shows it is increasingly hard to bounce back.

The "downward escalator" is about an entire generation moving into financial fragility regardless of their work status. When the majority of young adults can’t make ends meet, that's not a problem of individual financial management. That's a systemic crisis.

To explore the data, sign up for free access to the Economic Wellbeing Explorer.