Did baby boomers lift Britain out of recession?

By: Matt West

The 'grey pound' has played a significant role in lifting Britain out of the recession, research published today claims.

Saga - the financial services and leisure company for the over 50s – said people over the age of 50 accounted for more than 47 per cent of UK household consumer spending in 2012.

The report turns on its head the perceived wisdom that it is those between the ages of 21 and 34 who have the largest disposable incomes and to whom most time is devoted by advertisers and retailers.

Saga’s report with the Centre for Economic and Business Research found that spending by the over 50s has also increased considerably in recent years. 

The so-called grey pound now accounts for £320billion of consumer spending, £100billion more than nine years earlier. In 2003 spending by the over 50s accounted for 41 per cent of overall consumer spending.

among the over-50s grew by 4.4 per cent on average each year between 2003 and 2012, compared to 1.2 per cent among younger generations.

It added had spending not grown at the rate it did during that period Britain’s economic growth would have been depressed by 4.2 per cent (£6.8billion) and by 2018 the UK economy would be some 6.8 per cent smaller.

Moreover, had spending among the over-50s been only the same as the generations below them the economy would be 6 per cent (£105billion) smaller in 2015.

Between 2003 and 2012, over 50s spending on food and non-alcoholic drinks rose at an average rate 5.1 per cent a year, increasing from £26.2billion to £40.8billion. The CEBR forecast this to rise to 6 per cent over the next five years to £54.8billion by 2018.

Saga’s strategy director, Tim Pethick said: ‘People are living longer and have more active social and economic lives which is changing how we think about ‘retirement’.

‘As a consequence the over 50s have become, through their hard work, big earners and even bigger spenders – today they account for some 76 per cent of the UK’s financial wealth.  Their confidence in the future has made them willing to lift their spending faster than other age groups and, in doing so they have helped drive the UK out of recession.