Now that the last of the festive hangover is clearing we can stop looking backwards at 2014 and the media chatter about who was the man or woman of the year, and instead look ahead into 2015. As far as the UK is concerned this year will be all about the General Election. The run up to 7 May and, perhaps more importantly, the weeks afterwards will see politics dominating the media; and the election will significantly affect the prospects of British businesses and of the economy as a whole. Its importance can hardly be over-stated. And it is hard to believe that the Election will do anything but harm Britain's prospects in 2015.
One big problem is that no-one really knows what the outcome of the Election is going to be. Clearly, barring any sudden and dramatic shifts in sentiment it certainly will not be a slam dunk for either the Conservatives or Labour, with the SNP likely to do well, the Greens and UKIP possible winners, Labour likely to win seats in England and Wales and lose them in Scotland, etc. Whatever government emerges afterwards is likely to be weak and fragile. And it will be subject to relentless political and economic buffeting in the coming months, and may well struggle to survive at all.
So, even without factoring in global factors such as the oil price, Russia, Ebola, Syria and so on, the UK is facing plenty of uncertainty. And it is trite but true that the markets hate uncertainty; and particularly that businesses contemplating long-term investments always prefer a predictable political landscape. I would expect the business world to tread water for a while from March onwards, with decisions being deferred as psephologists are consulted. Consumer confidence may also take a bit of a hit, as we all try to weigh up the likely consequences of this or that policy or that combination of political parties for us personally. All in all Q2 looks certain to be nervy and hesitant, and not great for UK plc.
But for me these short-term impacts are nothing compared to the bigger, and longer-term, issues in play in May. In important policy areas both Labour and the Conservatives are currently pandering to what they seem to think are their bases, with populist, snide and above all pessimistic and negative sentiment holding sway. If a government is elected which is unfriendly to business then guess what? Businesses will be less willing to invest here. If a government comes to power which seems likely to go back on commitments to spend on major new projects we won't get the infrastructure we need. And if a government emerges which is basically antipathetic to immigration we will inevitably hobble our economy.
Most concerning of all is the possibility (or likelihood, depending on your taste) that a government will emerge that is committed to a referendum in 2017 on the UK's continued membership of the European Union. If 2014 taught us anything it was that the uncertainty of a referendum, bringing with it the prospect of looking down the barrel of a major constitutional, political and social change, is bad news. The Conservative European policy seems designed to subject us to at least two years of uncertainty - at the end of which we will face a decision by an electorate that has been routinely misinformed and misled by politicians and the media over the past several years about the real implications of being members or otherwise of the EU. Never mind the outcome, though: uncertainty all through 2015, 2016 and 2017 could by itself be truly disastrous for our economy.
So that's what 2015 holds in store. It won't all be bad, far from it, but there will be a lot of uncertainty , nervousness and hesitation. And a choice in May which might be characterised as being between a party that risks being bad for the economy in the short-term and one that runs that risk for the long-term. Not much of a choice, really. Happy New Year!Suggest a correction