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Britain’s Misery Index is tipped to rise later this year and through 2025, giving the next government an early headache.
Unemployment is set to increase further, puncturing the boost from inflation having fallen back to normal levels this year.
That means the Misery Index – dreamed up in the 1970s to capture the combined impact of unemployment and inflation on the population – is likely to worsen over the next 18 months.
The UK unemployment rate has already risen to its highest level in two and a half years, at 4.4% in the February-April quarter. It is forecast to keep rising; the Bank of England estimates it will average 4.6% in the second quarter of 2025, and rise further to 4.8% in Q2 2026 and 2027.
Bloomberg has calculated that this will push up the Misery Index to around 7.5 points over the first 18 months of the next government, up from six points at present.
The Misery Index has been falling under Rishi Sunak’s premiership, having hit a painful 15 (the worst since the 1990s) under Liz Truss’s administration in autumn 2022, when inflation was a 40-year high.
Andrew Oswald, a professor of economics and behavioural science at the University of Warwick, told Bloomberg: “We still have quite strong underlying wage inflation, unemployment will have to rise to reestablish the equilibrium. That will be much more painful than inflation has been.”
Both major parties are promising to help working people, if they win next month’s election. Labour’s pledges include delivering a genuine living wage, updating trade union legislation, banning exploitative zero-hours contracts and ending fire and rehire tactics.
But without a pick-up in growth, economists fear unemployment will rise as firms lay off some of the staff they have been hoarding in recent years.
As Hetal Mehta, head of economic research at St. James’s Place, put it: “Ten to 15 years ago, if you said to people unemployment is going to be 5%, they would’ve said that’s a great outcome, but now we’re talking about unemployment rising from what was a much lower point.
"It will be a difficult message for any new government to manage.”
Advertised salaries for UK jobs have fallen slightly for the first time since last autumn, according to new research which suggest the jobs market is weakening.
Jobs site Adzuna reports this morning that the average salary being offered for advertised vacancies fell by 0.1% in May, on a monthly basis, to £38,765, down for the first time since last October.
Adzuna says: "While slightly weaker salaries could help relieve some of the tightness in the UK labour market, it may also suggest increasing vacancies for entry or junior-level roles with lower salaries."
On an annual basis, salaries were 2.69% higher than in May 2023, following the rise in the National Living Wage to £11.44/hour at the start of April.
The report also found that. vacancies were increasing for teachers but falling for nurses and healthcare staff.
The agenda
• 9am BST: IFO German business climate index
• 10am BST: IFS to publish analysis of the general election manifestos
• 11am BST: CBI industrial trends survey of UK manufacturing
We’ll be tracking all the main events throughout the day ... |
| | | Marina Hyde | | Guardian columnist |
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| | All aboard the election rollercoaster
Covering the past however many years in British politics has been a rollercoaster. If I were Liberal Democrat leader Ed Davey I would obviously illustrate that point by simply being pictured on a rollercoaster. But look – I want you to know I am writing this while on a rollercoaster. Please excuse any typos.
I wouldn’t go so far as to say that writing about the many, many recent prime ministers has been therapy, but it has felt good to “talk things through” with readers who have also been strapped to the rollercoaster with their eyes held open.
Of course, other metaphors are available – in fact, UK governance has arguably worked very hard in recent years to become its own metaphor. So here we all are, shoulder-deep in the waters of the general election, as though it were one of our great rivers / brown-flag beaches.
And if, like me, you consider yourself adrift on the currents of our times, then why not consider grabbing on to a life-raft in the form of the Guardian’s political coverage? Our life-rafts are very reasonably priced, starting at just £4 a month, and allow us to keep producing more life-rafts/multi-award-winning political coverage – without having a paywall. If you can afford it, please consider it. We quite literally couldn’t do it without you.
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Tories did not lay waste to the economy, but the myth suits Labour’s campaign message 
