THE BLOG

Things Can Only Get Better. Don't Count on it

29/12/2015 10:41 GMT | Updated 29/12/2016 10:12 GMT

My reluctant bet is that by the end of 2016 the UK will be slipping back into at least a severe slowdown. I hope to lose.

The nagging worry is that we are still owed one. For most of us in work the 'greatest recession since the Depression' that began in 2008 was a strangely muted affair until the point when we were told it was all over in 2013.

But let us consider 'over'. More accurately, the slump was and remains controlled by fiscal devices, in much the same way that a dyke can hold back the natural forces of water: But only for as long as it is there.

For example, extraordinarily low interest rates have kept businesses afloat that might, and perhaps should, otherwise have sunk. They have also meant that people are still borrowing dizzying multiples of their income to buy property. Again.

Ah yes, property. Interestingly, professional property investors are starting to sell, suggesting they fear their particular bubble is about to pop. We have been warned.

But for everyone else, as ever, this most unproductive of asset classes in the UK is steaming ahead in 'value', all on borrowed money and a Government manipulated shortage of supply.

For those lucky enough to own a home this has generated a feel good factor that often translates into, yes, more consumer debt from spending.

Unfortunately, as we have become a nation of shoppers rather than entrepreneurial shopkeepers, except online, this doesn't help much.

The internet is a wonderful thing, but it often replaces jobs. It also messes with Government income, exploiting the borderless fluency of cyberspace to escape tax obligations.

Meanwhile, in the unregulated economy of things and people, the signs are not good. Global commodity prices are crashing - always a sign of failing business confidence - and wage growth is half what it was in 2007.

A truly strengthening economy would see inflationary pressure by now, particularly with unemployment back to what it was before the crash, and demand for raw materials outstripping their delivery. But no.

What else we know is that increasingly people in the UK are suddenly 'self-employed', which for many is a euphemism for struggling to stay solvent on their own wits.

The bigger political picture that so underscores sentiment is also worrying. There is the growing refugee crisis bringing in more economic dependents and challengers for jobs and resources. The myriad crises forcing their desperate flights to Europe look years from being resolved.

In the UK we will also be debating the European Union in earnest, and it is fair to say that a great many businesses will be holding fire on any investment decisions until our membership, or exit, is clear.

We should also not forget more of the economic home brew we will be digesting. George Osborne has triggered a round of tax rises and cost increases in 2016 through a social care levy on council tax bills and the new national living wage.

It remains to be seen what impact these have on consumer and company confidence, but hard to see it being positive. Costs are either absorbed or passed on, and neither is pretty when an economy is wobbling.

The pubic sector continues to be privatised, of course, usually at a discount. It certainly brings in money to the Treasury. But that is a little like feeling flush after cashing in all your savings. Channel Four is likely to go in the year ahead, as may the Land Registry.

One sector to watch will be schools in the academy structures beloved and encouraged by Government. Some are showing signs of failing. If they do, what happens to them may be emblematic of a wider economic fate. I hope not.