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Miserable Like It’S 1994, In Britain

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Société Générale has an update of the infamous index, which was first developed in the 1970s by American economist Arthur Okun. Basically it measures inflation plus unemployment, which means it can act as an indicator of the dreaded stagflation.

.....it is in the UK that the situation is the most worrisome, with a misery index of 11.9 (7.9% unemployment and 4% inflation), the highest level in 17 years! This index was at 5.8 in September 2004.

The last time that the UK posted this level of misery index in March 1994, the intervention rate was at 5.25% vs 0.5% today. And that is without mentioning the budget deficit. That is to say that the room to manoeuvre is the not the same for improving the situation since the Cameron plan can only deteriorate this situation further. Yet another reason to be especially cautious on the outlook for the pound sterling.


Source: http://ftalphaville.ft.com/blog/2011/02/18/492566/miserable-like-its-1994-in-britain/

Also includes a chart on the EMU area.

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Major's years were very rough for a lot of people despite the index implying things were getting less miserable. That's why Labour got such a landslide in the 1997 election.

The least miserable index years 2000 to 2003 weren't that great either although compared to Major's days they must have been mostly light relief. Since then the misery index has gone up again gaining momentum more or less in line with Labour's increasing debt and house prices.

Edited by billybong
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