What will 2013 bring?

 

It looks as if the world’s authorities  are all determined to do what it takes,  to print as much money as they dare, keep interest rates low for a long time, in a desperate bid to move the world economy forward more quickly.

In 2013 the whole world will be reflating. China and the other emerging economies have served their penance for high inflation, and are now shifting back to a more accommodating policy stance. Meanwhile the Fed, the Bank of England the Bank of Japan are all planning to expand money and credit as much as possible. Inflation fighting takes  a back seat.

2013 may be another year when the Euro area muddles through its debt problems, at the expense of poor output figures and continuing unemployment. The US should continue to grow somewhat, whilst Chinese and emerging market growth may pick up a little from the lower rates hit in 2012. The UK too should start to edge forwards next year, as some of the easy money the Bank is creating and injecting will at last get into the real economy. Who knows how long or deep a recession the electors in the most damaged parts of the EU will put up with as a result of the Euro experiment. Falling output will prolong the period of time it takes to get on top of the debts and deficits.

I doubt the UK will accept it needs to cut tax rates to increase the revenue and to stimulate activity, though that would help. I expect the US to come up with a temporary fix for the so called fiscal cliff, but do not expect the fiscal tightening in the USA to remove the modest growth in the US economy. The new Chinese leadership seems to have made a solid start and will doubtless wish to implement the policy of expanding domestic incomes and demand more rapidly, in the face of more limited opportunity to expand exports.

In other words, 2013 will be more of the same. The emerging market countries will grow fastest. The US will be the best of the west. Europe will be a weak performer, held back by stressed banks and by poor state finances, as well as by the Euro scheme.  The UK will undertake more monetary experiments, and should meet commentator expectations for some  slow growth in 2013.

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57 Comments

  1. frank salmon
    Posted December 30, 2012 at 11:06 am | Permalink

    All very predictable. We can’t move forward without growth. We can’t get growth unless we become competitive. We can’t be competitive unless we reduce our public sector, our zombie subsidy economy, much of our benefit system and the perverse rules and regulations forced on us by the EU. So, it just ain’t gonna happen.

    • Bazman
      Posted December 30, 2012 at 2:51 pm | Permalink

      How do you propose to become competitive? By cutting the benefit system? Good idea, but what well take it’s place, growth alone is not enough as we have seen in the past.

    • lifelogic
      Posted December 30, 2012 at 7:34 pm | Permalink

      As you say “We can’t be competitive unless we reduce our public sector, our zombie subsidy economy, much of our benefit system and the perverse rules and regulations forced on us by the EU.”

      Also the policy of expensive quack energy. We will get none of this with Cameron and fake green, big tax, big state Clegg. We have seven and a half years, at least, to wait it seems. Meanwhile the foolish Cameron tells us to be optimistic and thinks gender neutral insurance, gay marriage and royal succession are the big issues. No mention of the EU I note in his message.

      I already am optimistic but not about the UK economy under Cameron or the next election.

  2. Public Servant
    Posted December 30, 2012 at 11:13 am | Permalink

    Investors appear to be showing more confidence in the earnings of EU companies than UK companies judging by growth of FTSE EU ex UK index in 2012 compared with less spectacular growth of FTSE All Share index. Are you suggesting a complete disconnect between fortunes of companies and fortunes of economies?

    Reply There is no simple correlation between economic growth and stock movements over shorter time periods. Euroland stocks in some markets rallied strongly during 2012 from low levels when investors thought the Euro would survive, avoiding a major crisis. UK markets had not been so battered by Euro fears.

    • A different Simon
      Posted December 30, 2012 at 12:22 pm | Permalink

      Public Servant ,

      I don’t invest in indices only individual companies .

      I invested in a couple of European companies with projects which have been stalled for many years by bureaucracy and corruption in the hope that the current crisis will force authorities to get things moving .

      They haven’t yet . For me that’s frustrating but for the people in the areas where these projects are based with adult unemployment running at 25% and youth unemployment running at 50% it is a disaster .

      Things have gone from happening at a glacial rate of change to a plate tectonic rate of change .

      I don’t think there is much difference in investability of companies whose main markets are the UK compared with Mainland Europe .

      Comparing Europe with the US the main difference is cultural ; the middle classes in the US are more entrepreneurial .

      In Europe it’s drummed in to kids that risk is bad .

      These two factors create a problem for Europe which is very difficult to change because the impetus has to come from the individual , not the authorities .

      There is also a healthy network of small local service providers in the US .

      • alan jutson
        Posted December 30, 2012 at 12:53 pm | Permalink

        Simon

        In the US they are also very patriotic.

        They tend to purchase goods supplied and made by US Companies.

        That is why so many foreign companies fail in the US when they go there.

        We do not have this mindset in the UK anymore.

    • zorro
      Posted December 30, 2012 at 3:20 pm | Permalink

      Reply to reply – quite right, stock markets almost doubled from 2009-2012, when they were supposed to collapse……Why did the indices rise?…..Mega QE and commodity asset price inflation.

      zorro

  3. margaret brandreth-j
    Posted December 30, 2012 at 11:18 am | Permalink

    Isn’t it steady growth we need and not quick growth, otherwise the following years would need double the effort and so on to keep growth growing? boom and bust etcetera.
    As far as I can understand there are only a few ways of reflating and believe me I don’t understand much except from a domestic point of view i.e. don’t spend more than is coming in and always keep a reserve. You advocate the reduction of taxes to allow more available money or alternativly increasing available domestic spendability.The trouble is people . Having gone through traumatic financial times and with the threat of reduction of state pensions and having lost out on other types of pension and investment,it may be that saving will take a priority , in fact I can recall you yourself commenting that more people are actually saving.

  4. Caterpillar
    Posted December 30, 2012 at 11:30 am | Permalink

    The first paragraph seems somewhat optimistic.

    “the world’s authorities” – authorities? It sometimes seems like unelected central bankers and elected politicians who will not take responsibility, it does not seem like ‘authority’.

    “a desperate bid to move the world economy forward more quickly” – perhaps an opportunistic chance to experiment with unconventional monetary policy? It does not seem authoritative.

  5. Alan Wheatley
    Posted December 30, 2012 at 11:39 am | Permalink

    As to the “Worlds authorities”, I suspect that none have a World view; too much concerned with their own position and double guessing what others may be up to. So, of course, as the authorities jostle for advantage their efforts can be counter productive.

    Are not exchange rates a case in point? Goods and services priced in one currency can be made more attractive to buyers in other currencies by a devaluation of the selling currency. This can work, at least for a while. But if other currencies follow the example and devalue then an advantage is lost. And if all join in then can the ending ever be successful?

    So, perhaps it is all down to market forces, and let the best man win.

    • Bob
      Posted December 30, 2012 at 3:06 pm | Permalink

      Market forces will prevail, eventually.
      It just depends how long the voters will allow the ConLabLibs to try to defy gravity in order to delay admitting they were wrong.

      It could be absolutely ruinous for the UK.

  6. alan jutson
    Posted December 30, 2012 at 11:40 am | Permalink

    John, all rather depressing really, with more of the same forecast.

    With many Politicians thinking that printing money will sort all of our problems, we have not got much hope of any real improvement.

    Until everyone learns that you need to earn, before you can spend, and then spend less than you earn, the debt culture will continue.

    Another year for the more prudent to be hammered again.

    • zorro
      Posted December 30, 2012 at 5:35 pm | Permalink

      Their tactic all along has been to monetize the debt, whilst making sure that the 1% and banks are adequately cushioned. If they had issued debt free money, we might have been able to stimulate activity productively for the majority……As it is, QE has just financed government spending and is slowly bearing down on the debt money base. I am frustrated that they have presented this tactic as having ‘injected money into the economy’….In reality, it has done nothing of the sort. It has actually squeezed activity within the private sector and created an anti-growth/business behavioural cycle…..

      But what does the future really hold? Can it carry on in this seemingly benign fashion. Events and future wars may have a impact. How successful will the Chinese be at creating a sustainable internal customer base for their products in lieu of a shrinking external market?

      Will there have to be some worldwide ‘debt jubilee’ agreement. It might be necessary to redress poor growth/investment. In the UK, as others have mentioned, for any hope of sustainable growth, accommodation costs must be addressed to enable people to have more money to invest/spend. I cannot see, nor in reality would I want to see, the reckless credit expansion we saw in the ate 1990s/2000s……

      zorro

  7. Alan Wheatley
    Posted December 30, 2012 at 11:48 am | Permalink

    2013? 2014? 2015? 20…….

    With a rapidly increasing world population I wonder what all these people are going to do. Of course, if “growth” is the mantra then the more consumers the better. But where will it end? Answers please.

    Meanwhile, tomorrow looks OK. And I have exciting plans for the coming year. But….

    • A different Simon
      Posted December 30, 2012 at 8:05 pm | Permalink

      Alan Wheatley ,

      Negative population growth would help if our Govt would only stop (rapid inward migration)

      A large proportion of our population is so gullible that they believed house prices would keep rising exponentially indefinitely .

      Exponential growth can never go on indefinitely . Our current financial and societal system only appears to “work” under the dynamics of growth so is essentially a ponzi scheme .

      I’m sick of watching the global financial sector engineer a boom followed by a bust as a way of hollowing out the economy on the way up and leaving a vacuum of debt on the way down and expecting the consequences on the vulnerable to be socialised onto everyone else . Well and truly rinse , and repeat .

      We are now entering the squeeze stage whereby people are going to have to liquidate most of their assets at the bottom of the market so the financiers can offload fake fiat money for tangible assets .

      Most will be relieved of all the equity in their house (if they managed to buy) long before they die .

      It can’t be right that both parents of preschool children should have to work 40 plus hours a week .
      Even then the majority are unable to make provision for their old age so aren’t truly breaking even if it is accounted for properly .

    • lifelogic
      Posted December 31, 2012 at 8:00 am | Permalink

      Population growth will end – eventually either by people reducing by choice with birth control or by famine, disease, natural disasters, wars ………………… what other options are there in the long term?

      Fortunately, as countries become more developed, they do seem to take the first course. It might perhaps help if the Catholic church took a rather more helpful line on this as much else.

      • A different Simon
        Posted December 31, 2012 at 10:33 am | Permalink

        Population growth ended in the UK but the establishment took it upon itself to import more people , ostensibly because they would be needed to look after our aging populations .

  8. Alan Wheatley
    Posted December 30, 2012 at 11:53 am | Permalink

    Trying to be positive, if the UK can hang together then I believe British inventiveness, ingenuity and hard work will bring good results for everyone – providing the Government provides the sound foundations and leaves the rest to others.

    • Bob
      Posted December 30, 2012 at 3:16 pm | Permalink

      “providing the Government provides the sound foundations and leaves the rest to others.”

      And there lies the problem.

    • lifelogic
      Posted December 31, 2012 at 8:03 am | Permalink

      I too believe British inventiveness, ingenuity and hard work will bring good results for everyone – but where will these inventive and ingenious Brits be working and paying taxes? Hong Kong, Canada, Bermuda, Singapore ………………. perhaps?

  9. A different Simon
    Posted December 30, 2012 at 12:03 pm | Permalink

    Something like 75% of the population are net recipients of the taxation-benefits system for their entire working life system and this percentage increases when they retire with no savings at all .

    There is no way this situation can be rectified by economic growth , increasing tax take or trimming benefits without tackling the cost of living .

    The only way to make a difference is to reduce the cost of living – principally to reduce house prices and rents by building more and stopping immigration (gross not net) .

    The banks benefit by increased interest on oversized loans to the detriment of the householder who is probably paying for their mortgage or rent with what would be their pension if they were saving anything .

    All high house prices do is facilitate trickle-up ; the transfer money from the people just above the middle to the landlords and landowners via the people in the middle down who require housing benefit .

    To repeat ; Govt has to reduce the cost of accommodation .

    There will be no growth in the economy as a whole until you do that John .

    • zorro
      Posted December 30, 2012 at 3:15 pm | Permalink

      As you may have guessed I agree totally…..this is the brontosaurus in the fridge…..

      zorro

    • Bob
      Posted December 30, 2012 at 3:27 pm | Permalink

      With interest rates being kept artificially low, property prices will be likely to remain as they are.

    • Bazman
      Posted December 30, 2012 at 3:36 pm | Permalink

      Unless you are wealthy the problem is accommodation and always has been. To raise your living standards and security you have to obtain and pay for this in full. Strange how this message is never put across more. It’s not just about getting your own place. It’s much more than that.

  10. yulwaymartyn
    Posted December 30, 2012 at 12:23 pm | Permalink

    I agree with your comments and analysis. I would add that Europe is on hold until the German elections towards the end of the year. They may be some turmoil in Italy but I think this will be short lived. Europe awaits Merkel’s re election and I, for one, fervently hopes she will be elected for another term. Greece will get through it. Just.

    If Merkel wants the euro to survive it will survive; my prediction is that it will.

  11. backofanenvelope
    Posted December 30, 2012 at 12:39 pm | Permalink

    So, to sum up. In 2013 we are going to continue with the same policies that we had in 2012. They don’t seem to be working but never mind. Something will turn up. Or will it?

    • Bob
      Posted December 30, 2012 at 4:02 pm | Permalink

      As Albert Einstein said:

      “Insanity: doing the same thing over and over again and expecting different results.”

      “Any intelligent fool can make things bigger and more complex… It takes a touch of genius – and a lot of courage to move in the opposite direction.”

  12. Andy Cooper
    Posted December 30, 2012 at 1:10 pm | Permalink

    The UK will continue to plunge deeper into recession, we are not going to get out of this recession while we have the Con/Lab/Lib alliance to ‘make the hard decisions’.
    Reduced wages and job losses will mean less spending.
    Overcrowding and an increase in benefit claiments will void any minute increases in revenues.
    Government will continue to waste money abroad in Aid the EU and the illegal war.
    We will lose our AAA rating meaning we pay back more intrest on our debt.
    The UK has the worlds highest (or second highest) after Japan total debt again loss of employment and wage decreases will worsen this debt repayment.

    Oh and China and the Middle East dont get off scott free. They make their money from consumers in the west, when we stop consuming they start their recessions.

    • lifelogic
      Posted December 30, 2012 at 10:55 pm | Permalink

      Seems about right.

  13. Pleb
    Posted December 30, 2012 at 1:28 pm | Permalink

    Empress Merkel will lead the forth richt into 2014. A year from then the new labour government will capitulate to the richt and our debt will become the problem for them. Cameron and his crew will be given plum jobs as colabourators and the UK will be subsumed, finally, after three attempts, with not a shot fired.

    • lifelogic
      Posted December 30, 2012 at 10:56 pm | Permalink

      Indeed looks like the plan will succeed.

  14. Brian Tomkinson
    Posted December 30, 2012 at 1:42 pm | Permalink

    A very gloomy prognosis. No doubt your leader will continue to squander money we haven’t got and support more policies that further antagonise the traditional Conservative voter. He won’t do anything constructive about our membership of the EU but continue to play for time, ably supported by Clegg and Miliband. It is definitely becoming everyone for themselves; the political leaders have been put to the test and found to be woefully wanting.

    • lifelogic
      Posted December 30, 2012 at 10:57 pm | Permalink

      Exactly

  15. Chris Rickard
    Posted December 30, 2012 at 1:51 pm | Permalink

    Tory supporters are so depressed going into 2013 – economy in the tank, hopelessly split on EU & gay marriage, losing support to UKIP in the South and no support in the North & Scotland and not going to get any with this leadership. On the economy, usually a Tory strength (but not with this PM & Chancellor), the problem is we have a tax and spend Gov. Osborne is more Gordon Brown than Geoffrey Howe. Yes, it’s difficult being in Coalition and this Gov did inherit a mess. However, it’s made the mess worse not sorted it out. We need drastic cuts in current spending to fund tax cuts & stimulate investment. Those cuts need to include the ring fenced budgets & welfare whose bloated budgets are killing us. We need to make it easier for business to do business by cutting red tape & bureaucracy & we need this Gov to show some leadership on crucial issues which affect our economy like infrastructure investment in transport & energy. It’s nice to dream, but then again, the New Year is supposed to be a time for optimism. Grim reality can wait until January.

  16. Barbara
    Posted December 30, 2012 at 1:52 pm | Permalink

    It all boils down to how the USA come through the fiscal cliff senorio, then we may see some movement in growth here, albeit so slow we won’t see the atcual movement. I see ‘Which’ magazine have said this am most of Christmas as been paid for via credit cards. When the bills arrive in Jan 13 we will hear the hard pressing sob stories. I’ve always said ‘never a lender, or a borrower be’ and its paid off through my life. I’ve come through this festive season with no added debts, and didn’t have them before the season hit, can’t afford debts at any time. When a nation sees its government increase its credit card spending, and increase its spending on foreign aid, it feels they can do the same. Cameron as said we have a moral duty to help foreign poor nations, since when as any government added more debt problems to a nation for foreign shores, and thought it had a right to do so. We owe them nothing. We do owe our own citizens help when its needed, and I don’t mind paying taxes for that. Yes, work and jobs should be taken if its there for the taking, our problem is we haven’t any jobs to take.
    Demonising the poor as back fired, now they are warning we may have civil unrest if it continues, we may, lets hope sense prevails and we don’t; however, people can stand so much and then blow a fuse. Seeing our money spent on foreigners will blow many fuses if it continues.
    Cameron is not on the same planet as the rest of us; Clegg is not even on the planet, and Miliband is stalking the planet saying sorry for past mistakes, but offers nothing in how they would rectify those mistakes. Is obviously going to take a new party to put things right or a change in the Conservative leadership, the sooner the better.

  17. David Langley
    Posted December 30, 2012 at 1:52 pm | Permalink

    The chancellor is reported as saying on some USA show that the UK will not leave the EU. The Telegraph reports that senior figures in International banks are worried about the UK leaving the EU and will probably move their trading floors to EU countries.
    Are we getting bad vibes from the posh boys that their paymasters are starting to realise we are on the way to freedom from the EU monster at last?

  18. Tad Davison
    Posted December 30, 2012 at 2:04 pm | Permalink

    Sounds like a fair assessment, but in that, it clearly demonstrates that this present government won’t go far enough, or fast enough, with it’s economic re-alignment. We’ll still be paying through the nose to the EU. We’ll still be propping up a welfare system that promotes indolence and sloth. We’ll still have a police service we cannot trust. We’ll still have our servicemen and women killed overseas. And our armed forces will still be stripped bare, leaving us vulnerable.

    To solve all of our problems, we need a government to be radical and dynamic. If Labour win the next election, don’t expect that any time in the next 7 1/2 years, but by then, the country will be so damaged, and entangled in the EU, the complexion of that radical new government will be so fundamentally different, as to be unrecognisable. Best then, we grasp the nettle now, and take the difficult decisions sooner, rather than let them fester.

    I’m still worried that people’s new year expectations are far higher than they should be. We’ve lived beyond our means for quite some time, yet the notion that the state will always provide, still continues. And there seems to be far more Conservative MPs aware of that (but not enough), than MPs of the other coalition party, or of the Labour opposition, so I am left to wonder, which part of the phrase, ‘this country is in the mire, we need to do things differently’ do these people not get?

    Whatever governments spend, somebody else has to pay for it. Some might be able to afford high taxes in 2013, if that’s the way the coalition government goes, but it is interesting to see how that course of action is causing problems in France, so what if we did the same in the UK, and our wealth-creators chose to leave for pastures new?

    One good way to reduce the tax burden for 2013, is to plug some of the leaks, and stop blindly feeding the EU monster that wastes so much and delivers so little. David Cameron might wish to enlighten us as to the advantages of our continued membership, so that we can then have the proper debate long denied to the British people. And you never know, Clegg and Red Ed Moribund just might learn something.

    Well there’s my wish for the New Year, as fanciful and unlikely as it might be, because politicians have a proven track record for not seeing the world as the rest of us see it, and thus not doing what is necessary for the good of everyone.

    Tad Davison

    Cambridge

  19. David John Wilson
    Posted December 30, 2012 at 2:20 pm | Permalink

    We need more positive government action. I would like to see the minimum wage moved closer to the living wage. The extra tax generated should be used to give companies some help with the extra wage costs. I would suggest raising the band limits for employers’ NI contributions as this would also help to increase employment prospects for the lower paid.

    • A different Simon
      Posted December 30, 2012 at 8:16 pm | Permalink

      Rather than trying to increase the minimum wage , wouldn’t it be better to try and make the minimum wage a living wage by reducing the cost of living ?

      Campbell Newman in Queensland is the only politician who seems to grasped and articulated this . All the others without any exceptions that I know of think the solution is increasing wages .

      • Edward
        Posted December 31, 2012 at 5:34 pm | Permalink

        Indeed, reducing tax and NI for the lower paid would also be a good thing to do before increasing the min or living wage.
        As would controlling inflation.

  20. Denis Cooper
    Posted December 30, 2012 at 2:39 pm | Permalink

    “Inflation fighting takes a back seat.”

    So what is the point of having a law, an Act of Parliament, which explicitly states that for the MPC inflation fighting must always come first?

    Section 11 of the Bank of England Act 1998:

    http://www.legislation.gov.uk/ukpga/1998/11/section/11

    “11 Objectives.

    In relation to monetary policy, the objectives of the Bank of England shall be -

    (a) to maintain price stability, and

    (b) subject to that, to support the economic policy of Her Majesty’s Government, including its objectives for growth and employment.”

    If the Chancellor wishes to reverse that order of priorities, he could do so LAWFULLY by asking Parliament to agree to the suspension of Section 11 through Section 19 on the Treasury’s reserve powers:

    http://www.legislation.gov.uk/ukpga/1998/11/section/19

    But as he doesn’t do that, he is conniving at UNLAWFUL actions if he allows the MPC to disregard its primary objective as laid down by statute.

    And why aren’t MPs up in arms about the Chancellor, a Minister of the Crown, taking it upon himself to arbitrarily disregard the law as passed by Parliament, directly contrary to the Bill of Rights 1688 which is still on the statute book:

    http://www.legislation.gov.uk/aep/WillandMarSess2/1/2/introduction

    and which is still the fundamental constitutional law for our system of Parliamentary democracy?

    “That the pretended Power of Suspending of Laws or the Execution of Laws by Regall Authority without Consent of Parlyament is illegall.”

    • JimF
      Posted December 30, 2012 at 8:05 pm | Permalink

      Did you notice the performance related pay clause in the new BOE governor’s Employment Contract relating to price stability?
      Nor me. Funny that. Perhaps somebody should remind him of his legal obligation.
      Or perhaps I can just write a letter explaining why I broke the speed limit?

    • zorro
      Posted December 30, 2012 at 11:46 pm | Permalink

      I think that it tells you all you need to know about Parliament currently……. He can even allow more QE to happen without their public acquiescence (not that they would vote against it).

      zorro

  21. margaret brandreth-j
    Posted December 30, 2012 at 3:25 pm | Permalink

    backofanenvelope .. Micawber like something usually does turn up ,but are we strong enough to anchor onto it and let it grow, or will industry and new firms be paralysed by cutbacks ,or will competition be so strong that all seek to destroy others and we are left in a stalemate of natural communism where everything is the same and none outshines the other,therefore disallowing the vital variability where some industry grows and others do not. I can actually see the seeds of some very strong competition in the making here in the UK ( no branded names John) involving European markets . We need to hang onto these industries and allow them to develop. I see the recycling industries are gathering momentum .. less waste must be good.

  22. uanime5
    Posted December 30, 2012 at 3:46 pm | Permalink

    Given that the “most damaged parts of the EU” wish to remain in the euro so they have a stable currency it seems that their problems will take far longer to solve if they were to leave the euro.

    Given that the UK has had very little growth recently we’ll be lucky just to avoid a triple dip recession in the first two quarters of 2013.

    I doubt the UK will accept it needs to cut tax rates to increase the revenue and to stimulate activity, though that would help.

    The UK is doing this by cutting taxes for the richest 1%. I trust you’ll post how much extra tax revenues this results in.

  23. Muddyman
    Posted December 30, 2012 at 3:58 pm | Permalink

    The US is in debt up to its eyeballs! and it is not going to change the ongoing Con-Trick economy. China is pushing for growth in GDP and producing a monster housing bubble. The EU is a Basket Case – and the people who have created this?, why they are being subsidised by the man on the Clapham Omnibus heading for the Omni-shambles of incompetent Government (of any colour).

  24. Max Dunbar
    Posted December 30, 2012 at 4:30 pm | Permalink

    The belt that holds Europe toghether is Germany. The buckle that holds that belt is Merkel, but Merkel is more popular and respected outside Germany than within – somewhat like Thatcher and Gorbachev. If Merkel remains in power then there is a chance that we can muddle along for a bit longer.

    • margaret brandreth-j
      Posted December 30, 2012 at 8:32 pm | Permalink

      Just read a piece which states that Thatcher was out to privatise the NHS as early as 1982!?

    • A different Simon
      Posted December 30, 2012 at 8:32 pm | Permalink

      Angela Merkel is a remarkable woman .

      She’s the buckle but she can’t do it all by herself .

      Her cross must be going through life being constantly disappointed by colleagues and counterparts who cannot live up to her high standards .

      Maybe she too will wake up one day and realise too late that a federal EU will just deteriorate into a tyranny reminiscent of the worst aspects of the Eastern Bloc she grew up in and her colleagues will knife her in the back .

    • Posted December 30, 2012 at 10:04 pm | Permalink

      I am sure you are right…but the Eurozone, the UK and the U.S. keep avoiding the cliff …and the drop – when it inevitably comes – will be all the greater and more sudden and more disastrous.

  25. Boudicca
    Posted December 30, 2012 at 7:12 pm | Permalink

    Any small gains the UK makes in 2013 will be wiped out completely when our borders are opened to 29 million Romanians and Bulgarians at the end of the year.

    (Many could come to the land of- ed)”free everything” so they can claim welfare, social housing and public services which the long-suffering British taxpayer has to fund.

    And Cameron is doing NOTHING to stop it.

  26. Jon
    Posted December 30, 2012 at 7:23 pm | Permalink

    What we do have in this country is stability and perhaps undervalued as we see economic tectonic plates changing. Could be wishful thinking or could be an ace in the pack.

  27. Acorn
    Posted December 30, 2012 at 7:48 pm | Permalink

    JR, you sound a bit down, prospects wise, for the old economy. Neil Wilson reckons there is some re-lever activity starting for 2013, I reckon we are looking at stagflation. It looks also like we need to tune the “austerity” to keep up 8 – 10% unemployment, if you want to make the 2017 budget deficit target. I think we can safely assume that there is no “output gap” regardless of what the OBR / Treasury think. Hence the persistent inflation. As you will see from Mr Wilson’s graphs, it’s all about balance. One persons spending is another persons wages. A sovereign currency issuing government, is the only spender that never runs out of its own money.
    http://www.3spoken.co.uk/2012/12/uk-sectoral-balances-and-private-debt.html .

  28. Posted December 30, 2012 at 10:00 pm | Permalink

    What I see next year is a move towards real stuff like gold and commodities as fiat currencies are debased and abused around the world.

  29. Electro-Kevin
    Posted December 31, 2012 at 2:04 am | Permalink

    1 dollar a second takes 32,ooo years to reach 1 trillion dollars.

    x 15 to bring us to the US national debt of 15 trillion dollars.

    420,000 years @ 1 dollar per second.

    Really ?

    I know China was good at producing stuff but did she really generate this much output ? Is there enough time/resources in this galaxy ?

    If not China causing this level of debt – by selling goodies to the US in the last fifteen years – then what usary rates were the lenders lending at to generate such cosmically stupendous amounts ?

    The US is right to default and she has the gunboats to do so.

  30. Steve Cox
    Posted December 31, 2012 at 5:51 am | Permalink

    I have a feeling that 2013 is going to be the year that the markets will move their focus from the Eurozone to the UK. The truth will finally dawn on them that there is no serious deficit reduction programme in the UK, nor can one be started (even if this administration had the will to do so, which is patently does not) with an election now so close. I don’t know if this realisation will be a gradual process, or if it will be kick-started suddenly by an event, such as the UK’s inevitable loss of its AAA credit rating. Of course, the BoE can print yet more money, for a time at least, so that the government can still borrow and spend all that it wants, but I have a suspicion that it’s the currency markets where the coalition will finally learn that while Britain may be an island, monetarily it is not so. Further large reductions in Sterling will not help stimulate exports significantly as so much must be imported in order to create those exports. In the services sector where this does not apply, high wage inflation will be the inevitable outcome. As the decline of Sterling causes inflation to rise sharply, real incomes will drop sharply and any benefits from improved export competitiveness will be vastly outweighed by the decline in consumer spending. The government will assume that it has been here before and so there is no need to worry, but the difference is that now everyone will be focusing on the UK and its failure to get public spending under control. The BoE, possibly under its new Governor, will refuse to raise interest rates or stop printing money to fight inflation, and so the spiral will begin. When we reach £2/USD or perhaps £4/CHF, imports will have become so expensive that hardly anybody will be able to afford them. There will be major energy shortages, food shortages, and medicine shortages. The government will panic and belatedly start trying to remedy matters, even as inflation passes 20% pa. It won’t matter what they do, though, as they will have lost all credibility by then. The only way out of this spiral will be the appointment of a technocratic government committed to genuine austerity (as in Ire;and, where spending has been cut by over 30%), which will be the IMF’s price for the bail-out this time. It will be the 2020′s before Britain recovers from the huge errors made in 2013, and by then we will be a very mid-level economic power. All that history, all that wealth, simply thrown away because of political vanity, lack of backbone or commitment, and the entrenched liberal attitudes of a coalition government. A happy New Year to one and all. Enjoy it while you can.

  31. David Langley
    Posted January 2, 2013 at 10:09 am | Permalink

    Happy new year JR.
    This year the government will stop all foreign aid payments and will use the money to re energise industry with rock bottom interest loans, increasing job provision to match the decrease in benefits through the universal credit scheme.
    The EU subscription will be pared down to a basic contribution to maintain the EEFTA and cross border cooperation. All MEPs will be retired and EU council jobs retired. The saved money spent on our social provision for children and the disabled.
    The government will repeal all acts concerning membership of the EU.
    The Government will draw down immediately all troops in Afghanistan and other countries requiring foreign aid.
    The Royal Navy will be provided with aircraft carriers that can refuel its aircraft in the air thereby having credibility to operate in all aspects of land sea ops. The support vessels required to protect and maintain Naval security will be built in English and Scottish shipyards cementing the union.
    The government will stop bringing vanity and stupid bills to the house and concentrate on protecting our borders by doubling the Border Agency and establishing a new act that creates a new fourth defence force entitled “Home Defence”. Recruitment and manning and training similar to Armed forces defence.
    Please ask for a full list.

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  • About John Redwood

    John Redwood has been the Member of Parliament for Wokingham since 1987. First attending Kent College, Canterbury, he graduated from Magdalen College, and has a DPhil from All Souls, Oxford. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.
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