The Prince's Trust's annual youth index measures young people's happiness and confidence across a range of areas, including their health and career prospects, attributing an overall score out of 100 based on the responses to a series of survey questions.
This year the overall index score was 69, making it the first time since the index launched in 2009 that it has fallen below 70.
Almost half (44 per cent) of the more than 2,000 young people aged between 16 and 25 who were surveyed said they feared there would be fewer job opportunities for their generation over the next three years.
A fifth (21 per cent) told the charity that their life will amount to nothing no matter how hard they try.
Although nearly three quarters (73 per cent) of those in work think they can get a better job, 54 per cent said their lack of confidence is impacting on their career prospects.
And around a third (29 per cent) said that getting relevant work experience is one of the biggest challenges in pursuing a career.
In addition, the proportion of young people who do not feel in control of their lives has increased from 28 per cent reported in 2017 to 39 per cent this year.
The survey also looked at how young people are treated in the labour market, with 10 per cent on zero-hour contracts, and a similar proportion (12 per cent) having to work two or more jobs. A quarter (27 per cent) in employment are working less than 35 hours a week.
The unpredictable political climate is cited by 59 per cent of those surveyed as making them feel anxious about their future, adds the charity.
"This report highlights a staggering deterioration in young people's confidence in themselves and in their future," said Nick Stace, chief executive of The Prince's Trust.
"The cliff-edge decline in young people not feeling in control of their lives echoes conversations we have every day with young people who speak of their fears about finding work, taking short-term jobs over longer term careers and the knock-on effect of heightened uncertainty in the economy."
Dr Morag Henderson, senior sociology lecturer at University College London's Centre for Longitudinal Studies, called on the government to ensure young people's needs are prioritised in economic policy.
"Young people are dealing with more challenges than ever before, such as a highly competitive labour market, the rising costs of housing and the rising costs of higher education. This research is critical as it is raising awareness of the issues young people face," she said.
"Much needs to be done to ensure that young people have the same opportunities as previous generations. The government should try to seek a better balance between the economy's needs and the needs of young people as the benefits to society would be even greater if we had a healthy, happy generation of adolescents and young adults."