The throwback economy
Diane Coyle
The economic outlook published alongside the Spring Statement was grimmer than many economists had expected. The independent Office for Budget Responsibility is predicting inflation will climb to a 40-year high of 8.7 per cent by the end of the year, contributing to the biggest fall in living standards since current statistics began in 1956. That was the year of the Suez Crisis, which also foreshadowed a big drop in living standards.
The mid-1970s also saw two successive years of significant falls in real disposable incomes, as a result of oil price shocks and rapid inflation. That’s the era I remember as a teenager, in a family whose income could not keep pace with double digit inflation. The habits learned from my mum during this time—obsessively turning off lights and stockpiling special offers—have stayed with me ever since. The recession of 1981 was another bad one, bringing a tidal wave of factory closures as Britain set the seal on its deindustrialisation. My dad was one of the few lucky Lancashire cotton-workers to get another job when his mill closed; many never worked again.