This year

What might be

I think it’s too early for any firm economic predictions, but here is a thought. What is it like when an economy is coming out of recession? How do you spot the signs? I think it is a bit like the end of a battle. Bad news flies around like bullets, every day something worse. Then, almost imperceptibly the bullets seem to be less frequent; the noise abates; after a period in which no one has been shot you feel able to put your head cautiously above the parapet. I believe that this warmer feeling may come at the end of this year. Not, as Alistair Darling said that the recession will be over, that will I think be for 2010, but there will be gradual signs of it bottoming out and consumers nervously going back to the shops, perhaps moving house.

The government can, in my view, do little to bring this about, but there is much they could do to prevent the recovery. Unfortunately they have to guess when the lavish expenditure stops and when Prudence should name the day. They seem uniquely ill-equipped for this decision.

This year the economic spotlight may turn its focus to Europe. Some respite will be given the exchange rate as the dollar makes up for its fall, but a long period of a high euro will expose holes in the economic apparat. The PIGS (Portugal, Italy, Greece, Spain) and perhaps Ireland and Denmark will look very uncomfortable in the Euro but I believe, to my regret, that the line will hold. However the euro/£ rate will improve for us expats: 1.25-1.30.

Politically, I have one suggestion, I hesitate to call it a forecast, which I have seen nowhere else. There is much talk about when the election will be (it has to be before late Spring 2010). It seems that if Gordon called it now he would lose, but conventional wisdom says the Tories have everything to gain by him delaying (and things are going to be bad this year, I feel quite safe with that forecast). Why not duck the issue completely? He doesn’t want to be seen as the Gerald Ford of Britain, never elected or electable (and at least Ford didn’t engineer the departure of his predecessor). We get to the end of 2009 and Gordon retires, citing ill health (he tried to prepare us for this earlier in the year), an exhausted public servant, a martyr for his people, having steered them through the most difficult time in their history ‘We..’, I think he’ll use the Royal we..'We have laid down the direction, we have shown the path and navigated the storm, now it is for a younger generation to take the helm….sunlit uplands (if I may mix metaphors), building on our work…blah blah’. He accepts the Garter and the OM and retires to write his rather dull books. He could hardly do this with the election date staring him in the face so would probably choose Christmas 2009.

Other political forecasts: the eurosceptics’ hope, that Czech President Vaclav Klaus as the new president of Europe will provide some shake-up or at least defence against further EU integration, will be dashed. The powers that be have been preparing for this for some time and at best they will slow down for 6 months, effectively bypassing him. They seem to have persuaded the Irish to hold a second referendum, essential in case the Tories win in Britain, and the Yes vote will probably win it, unless the recession is dreadful and the No-ers can pin the blame on the euro. Unlikely, I think.

President Obama will have some frantic back-pedalling and expectations management to do, and rather than hitting the sidewalk running I think early in his term he will be advised to be the president that never was, emerging occasionally with some brilliant rhetoric to keep people’s confidence but letting Hillary dominate the headlines. By November 2012 he will need to have weathered the economic storm, gained a reputation for prudent economic management and made America look like a moral, if not a military leader. 2012 will be seen as a good one to win, and his efforts to that end will begin this month.

What won’t be

The Middle East, despite being touched by the magic hand of Obama, will be much the same as it has been since 1948.

In my view 2009 should be the year in which HM The Queen abdicated in favour of Charles, Britain left the EU, The Church of England disestablished itself and the BBC was halved in size becoming a self financing trust. But I predict that none of these will happen.

I wish you all a prosperous 2009, knowing that won’t happen either. Happiness is more important, as is a glass of Chianti.