Aside from the debate on independence, the new year presents some ongoing challenges. Our writers offer some potential outcomes
Will the banks return to favour?
From rate-rigging to mis-selling, and sanctions-busting to claims of drug abuse, Britain’s banks remained mired in scandal last year, so the industry will be hoping no more skeletons come tumbling out of the closet in 2014.
Lloyds Banking Group, fined a record £28 million last month over “Champagne bonuses” for its sales staff, will be especially keen to avoid blotting its jotter as the UK government prepares to further reduce its stake in the lender.
Barclays boss Antony Jenkins believes it will take five to ten years for his group to regain the public’s trust, but the Archbishop of Canterbury, Justin Welby, says overhauling its culture could take a generation. GM
Will it be a big year for flotations?
Stock markets are expected to enjoy a bull run with optimistic predictions that the FTSE 100 could go as high as 8,000. As confidence returns more firms are likely to kick-start flotation plans. Fiat, House of Fraser, Poundland and TSB could be joined by Scottish housebuilder Miller Group and the flight comparison website Skyscanner. TM
What will become of Prestwick Airport?
The Scottish Government, which announced it was nationalising the airport two months ago, sees a viable future for the loss-making facility, but how it intends to achieve that is decidedly unclear. Given that the Ayrshire hub failed to attract a buyer during the 18 months it was up for sale, it faces some daunting challenges. That is perhaps why the Scottish Government has so far had little to say on its future plans.
The addition of Turkish charter operator Oska Travel means Prestwick can now offer passengers more than just Ryanair flights, but not enough to offset declining passenger numbers that have slumped from a peak of 2.4 million in 2007 to little more than one million. Much will depend on the choice of a “commercial partner” to run the airport on behalf of the Scottish Government, and here again, there has been no news. KD
Will the lights stay on?
As coal and oil-fired power stations close to meet environmental targets, excess capacity in the UK’s electricity grid is plunging, and a growing number of industry experts have been warning of the possibility of power cuts if a cold snap causes a sudden peak in demand. Even outgoing Ofgem chief Alistair Buchanan warned that reserve margins were becoming “uncomfortably tight”. The UK government has moved to build further nuclear power plants, but they will take years to come on stream, so Britain will have to increasingly rely on gas – making it vulnerable to the vagaries of global supply. DJ
Will the Commonwealth Games reverse decline in Glasgow’s east end?
Hopes are high, with a survey of residents in May finding that 80 per cent expect a positive impact on those communities most directly linked to the games – Bridgeton, Calton, Camlachie, Dalmarnock, Gallowgate and Parkhead. However, those with longer memories will recall previous initiatives that failed to meet expectations.
Europe’s largest urban regeneration project at that time – the Glasgow Eastern Area Renewal scheme – ultimately achieved little despite 11 years of massive effort from 1976 onwards. Officials today concede that the games themselves are not enough to bring long-term education, training and employment opportunities to the area. Clyde Gateway, a key organisation in the regeneration effort, will carry on for a further 14 years after the final competitor leaves the athletes’ village. KD
How strong will the recovery be?
Probably the strongest since 2007. The consensus is for growth in gross domestic product (GDP) of about 3 per cent, heady days indeed compared with the chronic downturn. One significant headwind will be that Eurozone growth is expected to be pallid, at just 1 per cent – always important for Britain while 40 per cent of our exports go there. Overall, though, the most optimistic prospects for years. MF
Will interest rates rise?
A real cliffhanger in the second half of 2014. Bank of England governor Mark Carney gave strong hints last summer that rates were unlikely to rise before 2016, when he hoped unemployment would have fallen to 7 per cent. Growth has proved stronger and more widespread than expected, however, and that unemployment target could now be reached in the back end of this year. The other side of the coin is that the BoE will not want to choke off the first real momentum the economy has had after six “lean” years. Also inflationary pressures are likely to look under control in 2014. It all adds up to a really close call on rates, which have been at 0.5 per cent since March 2009. MF
Will bitcoin become a mainstream currency?
Launched in 2009 by the elusive Satoshi Nakamoto, the digital currency achieved notoriety last year when its value soared, before dropping sharply after China’s central bank imposed restrictions on its use. Regulators also fear the payment system, which is not regulated by any monetary authority, could be used for illegal purposes such as money laundering and offers little protection to investors.
However, bitcoin appears to be gaining traction as an alternative to “real” money, with some Subway franchise owners in the United States allowing customers to buy their sandwiches with the virtual coins. For those with even loftier ambitions, Sir Richard Branson will even accept bitcoin as payment for his Virgin Galactic space tourism venture. GM
Contributors: Terry Murden, Martin Flanagan, Gareth Mackie, Dominic Jeff and Kristy Dorsey