Objective: This study re-evaluates the impact of the COVID-19 pandemic on 16-29-year-olds’ mental health in the United Kingdom, using longitudinal data from the UK Household Longitudinal Study (UKHLS) and its predecessor, spanning 2001 to 2023. Methods: Unlike existing research, the study accounts for potential reporting bias introduced with the UKHLS Covid-19 study. We aim to identify the causal effect of the lockdown (April 2020 to March 2021) and post-lockdown (April 2021 to March 2022) period by estimating counterfactual mental health trajectories based on long-term trends. Findings: Mental ill-health among young adults had been rising for nearly two decades before the pandemic. During the lockdown phase, the average General Health Questionnaire (GHQ-12) psychological distress score increased by 8% of its standard deviation, and clinically relevant cases of psychological distress rose by 4.3 percentage points. However, the impact was time-limited, with mental health levels returning to trend predictions by April 2021, suggesting that the initial pandemic impact on distress was temporary and did not permanently 'scar’ average mental health. The observed recovery aligns with receding feelings of loneliness and higher life satisfaction. Variations in the pandemic’s effects were observed by gender, household income, and ethnicity, with women and young adults in the top third of the household income distribution experiencing a more substantial initial increase in psychological distress during lockdown. Notably, the findings do not indicate stronger mental health effects during the lockdown period in the under-30-year-olds than in the rest of the adult population under 60. Conclusions: The study underscores the importance of accounting for pre-existing trends when evaluating the mental health consequences of external shocks and highlights the resilience of young adults compared to frequently reported narratives