Let's consider where we are in economic terms and it doesn't look good.

The government's stated objective of making some £123billion savings in the next seven years looks increasingly unlikely. But even if this were possible there would still be a shortfall that would require ever-increased taxes or reduced spending to get back to where we were five years ago.

As the OBR believes, this would mean that we could only look forward to improving public finances until the middle of the next decade. After that, there would be likely to be deterioration in the economy for decades thereafter.

We appear to be entering a potential period in which austerity could become the norm.

If there is any chance of avoiding this we require some adventurous and radical thinking.

As Labour's Rachel Reeves, shadow chief secretary to the Treasury, suggests, without investment in the economy we risk a long period of "slow growth and high long-term unemployment".

Indeed, as the Institute for Fiscal Studies state:

"The OBR's second fiscal sustainability report [..] reminds us of the significant challenges which we face as a result of the spending pressures created by population ageing and a likely loss of tax revenues from motoring and north sea oil and gas companies. We need to respond to this analysis by planning now for the changes to spending and taxes that will be required."

Ensuring that we have the right environment for wealth creation is obvious; it increases economic activity and, of course, means that there are likely to be jobs for future generations.

As we are becoming increasingly aware, finding jobs for the young is an urgent priority.

A report jointly 'Engaging Employers in Tackling Youth Unemployment' (May 2012) written by the Chartered Institute of Personnel and Development (CIPD), the TUC and thinktank the Institute for Public Policy Research (IPPR) has called for such action.

This report argues that there is a need to create opportunities for all young people; most especially without qualifications and who, are needed to carry out manual jobs that do not require degrees.

Unsurprisingly, we are compared against more-prosperous European countries, notably Germany. As Katerina Rudiger, believes:

"Employers are much more engaged in other countries, and they really see it as part of their responsibility to prepare young people for work."

'Engaging Employers in Tackling Youth Unemployment' states that when compared to what goes on in other "northern European countries", youngsters in this country are largely left to their own devices:

"[they are] left to navigate the transition to work and responsible adulthood alone, and the support they receive varies wildly across different families, communities and employers."

The report cites the fact that in Germany a far better system exists in which there is cooperation between employers, unions and the government.

A wide variety of apprenticeships exist for those who do not wish to go into higher education; some 1.5 million in which it is possible to study a choice of 342 subjects.

The system used in Germany is one in which employers provide training for three days a week and state governments (Länder) provide the curriculum for classroom study.

What this provides for apprentices on the three year schemes, according to Lutz Ewald, from trade union IG Metall, is "practical experience and theoretical knowledge" and helps them to avoid the risk of long-term unemployment.

Though the current government has expressed its desire to emulate Germany, there is a long way to go. There are now over 450,000 (four times more than four years ago). The trouble is, a majority on these apprenticeships are neither in the 16-24 age group nor unemployed.

Indeed, many were short-term schemes (less than six months) and considered to be of little long-term benefit.

The evidence (and research) into the effects that getting young people into situations where there is a disciplined approach to working demonstrates that there is long-term benefit to them and, of course, to the economy.

It has been noted that many of today's business leaders in the engineering and manufacturing sector commenced as apprentices; exactly like many of those with whom I went to school who did not wish to continue into the sixth form to study A levels.

Schools have a vital role in assisting those with less academic inclination in making the right choices. The trouble is, there is a belief that they do not do enough to prepare young people adequately for the transition into the workplace.

It is easy to consider the negative side of what we do in the UK and to dwell on how far behind we are when compared to those European countries that have much more systematic and structured ways of making sure they consider the needs of young people.

A very positive example of what can be achieved was demonstrated by Waitrose which allowed 12 young unemployed people to work in their logistics department. They were given support and guidance through a mentor.

The result was that ten of these young people are still employed by Waitrose. Perhaps to put it another way, ten individuals who will not become lost to the scourge of hopelessness associated with long-term unemployment.

However, what is really needed is to generate economic activity that will create confidence and, of course, mean that companies are willing to invest in jobs and the sort of apprenticeship schemes found in other European countries.

The big problem is that those businesses that have survived the mayhem that was unleashed by the global financial crisis have become risk-averse.

It is believed that British companies currently have cash reserves of over £700billion; roughly half of the UK GDP.

These companies are being cautious and are unwilling to make any investment other than that which is absolutely essential until they become confident that the economy really is picking up.

So, more optimism is needed to get us out of the current crisis and to develop opportunities for future growth and job creation for the next generations.

But it's worth noting that over-optimism is also a large part of the reason we got into the current mess.

The hubris displayed by bankers, financiers and property developers across the world, but especially in the US where the term "sub-prime market" is now notorious, has shown what happens when you invest in the wrong things and forget to innovate in real products (as the Germans continue to do).

Very interestingly, Nesta (National Endowment for Science, Technology and the Arts) has just published a report, 'UK Innovation Index: measuring the contribution of innovation to economic growth and how this varies across the sectors'.

It is significant that this report shows that the UK economy has experienced what is considered to be a "lost decade" of innovation.

Remember, the start of the financial crisis which triggered a run on Northern Rock was five years ago.

Whilst Nesta reports that investment in innovation in new products and ideas has fallen by £24bn in the last four year, they point out that this trend has been going on for a decade.

As they demonstrate in their report, business in the UK believed that it was simpler to make money by investing in financial schemes sold by banks and property.

Geoff Mulgan, chief executive of Nesta, argues that innovation in real products is the only route to long-term growth. Indeed, as he points out, whilst investment in innovation in manufacturing and product development rose through the 1990s, it has fallen thereafter:

"The concern is that today's report and Investment Index show that investment in the future didn't just fall during the immediate aftermath of the financial crisis, but also continued falling as the economy appeared to stabilise."

Mulgan contends that we must look at what is going on elsewhere and that if competitors are making investment a "top priority" it is incumbent on us, through the influence of the government, to do the same:

"Our data show that British business prioritised cash and concrete over investment in future technologies and services, a potentially disastrous decision that now needs to be put right."

It would be wrong to blame manufacturers. On the contrary, manufacturing is a vital contributor to investment in innovation.

Even though manufacturing makes up 17% of GDP, it accounts for 77% of investment in research and development and 23% of total business innovation development.

As Nesta contends, we need to invest even more and to ensure that money sitting in business accounts and funding from the Bank of England is channelled into the innovative and creative capability that will ensure we have a base for wealth creation in the future.

Such investment is absolutely vital to us out of the mess we are in. It is this which will create the jobs that so urgently needed for the generation of young people who face pretty dismal prospects.

And ensuring increased economic activity is essential to provide the increased tax receipts to support the ever-growing number of elderly people in the UK.

The cliché, "We're all in it together" has never seemed so apposite.

For the old, the young and, indeed, everyone else, we need some solutions.