2010 - What lies ahead

I have been struck low by a chest infection over Xmas and have taken the precaution of staying mainly indoors. I have a long history of chest problems and know that once it gets its claws into me then I could be laid up for about two weeks. This has given me the opportunity to catch up with lots of films I have wanted to see and to read a lot of newspaper articles. There was a very interesting piece in The Independent on Xmas Eve predicting that the next decade would be the Asian decade with India and China increasingly running the world's affairs and with the USA and Europe having less and less influence. I think that this is certainly the case and will lead to mounting paranoia by the US in particular, which has run global affairs since the European powers engaged in an imperial contest called World War I, effectively bankrupting their economies and allowing the US to become the dominant power. The US century is now coming to an end and this will lead to a great deal of upheaval. The antagonism between China and the US was visible at Copenhagen and is increasingly obvious in the economic and political spheres, particularly in Africa.

Over Xmas my friends and relations in Ireland were in touch with me and all of them were complaining loudly about the savage budget just introduced in the Irish Republic. I recently heard a Tory frontbencher on 'Hard Talk' on BBC News 24 praising this budget and suggesting that this was what the UK needed to do. So for anyone interested in how many bitter lemons the Tories would ask us to suck on, I suggest having a look at the details of the Irish budget. Needless to say, the property speculators and bankers who created the mess in the Irish Republic have hardly been affected at all and the axe falls mainly on those on welfare on the public sector employees. Not surprising that there has already been one day of a national strike there and that more industrial unrest is forecast.

It is also the time of year when we get predictions about the year ahead - and this year about the decade ahead - as mentioned above. Larry Elliott in the Guardian, who is one of my favourite economic commentators, predicts the following for the UK economy in 2010:

"Whoever wins is going to face a tough economic challenge. It will be another year of wage restraint and job insecurity. Even if growth resumes it will be modest, barely visible to the naked eye. There will be little evidence of a feelgood factor.



A taste of the spending squeeze to come was provided last week by Lord Mandelson's decision to take the axe to university budgets. There will plenty more of this in all the other areas that have not been ringfenced from cuts. Housing and transport look particularly vulnerable. A broader question is whether the UK can survive the year without a strike in the bond market and/or a run on sterling. All the ingredients are certainly in place: a big budget deficit, an underperforming and unbalanced economy, political uncertainty. A hung parliament, which some psephologists are predicting, could be the final straw."

Larry Elliott predicts that a Tory victory is less than certain and that is certainly the view of a number of pundits.Labour are clearly out of favour but there is no great enthusiasm for Cameron's slash and burn regime.

Meanwhile the Chartered Institute of  Personnel and Development predicts rising unemployment in 2010 - according to their report issued today:

The report estimated that the number of people in work will fall by 250,000 between the third quarter of this year and the second three months of 2010.


The 2.8 million unemployment prediction is much lower than an earlier forecast by the CIPD of 3.2 million, with the report adding that the coming year will be better for jobs than 2009.

Dr John Philpott, the CIPD's chief economic adviser, forecast a continued squeeze on pay rises next year, adding: "This could be difficult to deliver following a recession during which many private sector employees have experienced pay freezes or pay cuts.

"A slower than expected recovery or stronger earnings growth would threaten to raise peak unemployment to at least three million.

"The impact on jobs of planned cuts in public spending and tax increases, especially the 1% hike in employers' National Insurance Contributions from April 2011, is expected to be felt after the peak in unemployment."

The last sentence is critical as it indicates the danger of the Tory policy. The only way forward is for more job creation, real sustainable apprenticeships, and improvement of infrastructure such as the rail network and millions of jobs in renewable energy and green jobs. The alternative is an earlier than expected visit by the Spirit of Christmas Future.