I didn’t think Leave would win in the referendum, and I didn’t think Trump would win in the US. And back in 2015 I didn’t think the Conservatives would win. So this blog is more an attempt to explore and test my shortcomings rather than one you should heed. That said…
Some lessons from 2016 (and 2015):
- Don’t stay up on election nights – just wait til the morning!
- I have a terrible optimism bias when it comes to politics.
- Polling is actually quite reliable, at least when there are only two main options. I should have trusted the main referendum polling message – that it was very close – while in the US the national polls were accurate (and Nate Silver was right about a paucity of state data and about correlated errors).
And some simple, testable predictions for 2017 and beyond:
- Real pay growth figures are going to fall sharply over the coming months.
(By May, ONS figures)
While real regular pay growth has been 1.7-2.0% throughout 2016, it’ll be closer to zero by May’s release.
- UK GDP will perform worse than expected.
(2017-2019 growth, vs OBR Nov 2016 forecast)
Though I’m still a long-term optimist when it comes to technology/productivity, and though GDP has held up well since the vote, I’m pessimistic about Britain’s prospects right now.
- UK public borrowing will be higher than expected too.
(2017-2019, vs OBR Nov 2016 forecast)
For a range of reasons, not even including the large “exit bill” we’ll inevitably pay for outstanding EU pensions etc.
- Some welfare cuts will be reversed or counteracted with new welfare spending.
(In 2017 or 2018)
This may be wishful thinking, but the squeeze looks unrealistically large, especially given the PM’s rhetoric about ‘just about managing’ families and a ‘sharing society’
- The Conservatives will not continue to poll above 38%.
(At least for 2017 and 2018, Britain Elects poll of polls)
They’re currently on around 41% and have a 12 point lead over Labour. It’s plausible that they could further squeeze UKIP and Corbyn’s Labour and secure support by blaming everything on those nasty EU countries. But with the end of the May honeymoon, rising prices, big welfare cuts, squeezed public services, and voters tired of hearing about tough Brexit negotiations, it’s hard to see such high public support lasting, no matter how bad the opposition. Where that support will flow to is a tougher question.
- The UK will leave the EU, the single market and the customs union.
I said before the referendum that I didn’t think remaining in the single market was plausible if Leave won, and everything the PM’s said since then seems to back that up.
- Stamp duty on shares will be scrapped.
A (relatively cheap) sweetener for the city, UK companies, non-debt financing and pensions amid Brexit turmoil. No-one’s discussing this, so maybe it’s unlikely, but I’d be tempted if I were Chancellor.
As ever, the most important determinants of the future are technology, catch-up growth in the rest of the world, education, avoiding climate change and avoiding the use of nuclear and biological weapons. But on technology, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten” (Bill Gates) – though I do think 2017 may be the year when VR goes mainstream. And on the risks of conflict, who knows?, but with clown Trump to the left of Europe, and joker Putin to the right, it’s hard to feel safe (stuck in the middle with EU?). (Sorry.)