Faisal Islam Warns Youth Labor Crisis Is UK’s Next Economic Time Bomb

Whoever wins the next UK election won’t just inherit a budget deficit or inflation concerns—they’ll inherit a generation of young people who’ve stopped trying to find work. That’s the stark warning from Faisal Islam, the BBC’s Economics Editor, in an April 2025 interview with CA Magazine, published by the Institute of Chartered Accountants of Scotland (ICAS). "I’m really worried about the number of young people disconnected from the labour force," Islam said. "The rise of mental health issues. People going straight from education into the benefits system. You can’t help but have this feeling in the pit of your stomach. This should not be happening. It’s a waste—for the economy, for the taxpayer, but most of all, for the individuals." The problem isn’t new, but it’s accelerating. Official data from the Office for Budget Responsibility (OBR) shows that nearly 900,000 16-to-24-year-olds in the UK were neither in employment, education, nor training (NEET) in late 2024—the highest level since 2012. And it’s not just about unemployment. Many are psychologically checked out. Some have never held a job. Others tried once, got burned by toxic workplaces or mental health setbacks, and never came back. The system isn’t catching them. It’s letting them slip through. Islam, who’s been on the front lines of Britain’s economic upheavals since the 2008 financial crash, doesn’t see this as a temporary blip. He’s watched the collapse of Royal Bank of Scotland (RBS), navigated Brexit’s economic fallout, and reported from the heart of the pandemic. But this? This feels different. "I’ve covered crises," he told CA Magazine. "This isn’t a crisis. It’s a slow-motion collapse of potential."

The Silent Exodus from Work

What’s driving this disconnect? It’s layered. Mental health struggles among young people have spiked since 2020, with NHS data showing a 40% increase in referrals for anxiety and depression in the 16–24 age group between 2021 and 2024. But it’s not just psychological. The job market has changed. Entry-level roles—once the stepping stones for teens and twenty-somethings—are vanishing. Retail, hospitality, and manufacturing have automated or outsourced. Apprenticeships, once a reliable path, have been gutted by funding cuts since 2015. Meanwhile, the cost of living has made unpaid internships or low-wage gigs unsustainable. Many young people can’t afford to work for minimum wage when rent in cities like Manchester or Bristol eats up 70% of their take-home pay. "It’s not laziness," Islam emphasized. "It’s a system that tells them: ‘You’re not ready. You’re not qualified. Come back when you’re better.’ But no one tells them how to get better."

A Fiscal Time Bomb

The economic cost is staggering. The OBR estimates that each NEET individual costs the taxpayer an average of £18,000 per year in benefits, lost tax revenue, and social services. Multiply that by 900,000, and you’re looking at over £16 billion annually—more than the entire annual budget for the Department for Education. And that’s just the direct cost. Indirectly, it drags down productivity, innovation, and consumer spending for decades. Islam’s April 28, 2025, article for AOL, titled "Faisal Islam: The real reason Reeves is making you pay more tax," ties this directly to fiscal policy. He points out that Chancellor Rachel Reeves is constrained by OBR rules that limit borrowing to investment and day-to-day operations. But if youth disconnection continues, the welfare bill will keep rising—and so will the pressure to raise taxes or cut public services elsewhere. "She’s not choosing to tax more," Islam wrote. "She’s being forced into it by structural decay."

History’s Warning: Energy and the Blind Spot

Islam often draws parallels between economic blind spots of the past and present. He recalls how Germany handed control of its gas infrastructure to Gazprom—a decision that left it vulnerable when Putin weaponized energy. "The very mechanism designed to protect energy security was literally handed to the biggest threat to energy security," he said. Now, he fears the same is happening with human capital. We’ve built systems to manage unemployment—but none to re-engage the disengaged. He adds chilling context: "A younger Vladimir Putin wrote his PhD thesis on the importance of Russian energy exports in furthering the country’s geopolitical ambitions." The lesson? Power isn’t just in oil pipelines. It’s in who controls the workforce, the talent, the future. And right now, the UK is quietly surrendering its.

What Comes Next?

Local elections on May 1, 2025 are already shifting political fault lines. Reform UK is gaining traction among working-class voters who feel abandoned. Independent Muslim candidates are winning in urban centers, demanding better youth services. Labour and the Conservatives are still debating tax rates, but neither has a coherent plan to bring young people back into the economy. Some local councils are trying. In Leeds, a pilot program pairs NEET youth with mentors from local businesses and offers subsidized childcare for those returning to training. Early results show a 34% increase in job placements after six months. But it’s a drop in the ocean. Without national funding and coordination, these efforts remain islands.

The Real Cost of Inaction

Islam doesn’t just see numbers. He sees people. The 19-year-old who dropped out after being bullied at her first retail job. The 22-year-old with anxiety who can’t leave his bedroom. The 24-year-old who studied economics but can’t find a single employer willing to hire him without five years of experience. These aren’t statistics. They’re the next generation of taxpayers, entrepreneurs, voters. "We’ve spent decades talking about productivity," he said. "But productivity starts with people who feel they belong. If we don’t fix this, we won’t just lose a generation. We’ll lose our future."