Bill Jamieson: 2016 year of ‘Great Tribulation’

The UK's trade deficits are the worst in the G7 as the strong pound hits goods exports. Picture: Getty Images
The UK's trade deficits are the worst in the G7 as the strong pound hits goods exports. Picture: Getty Images
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ACCORDING to a close relative on the Isle of Bute who I love and admire, 2016 is not a year we want to know. She is already stocking up on tinned food for the onset of The Great Tribulation. I didn’t note the full gist of her phone call the other week, but it went something like this.

There is soon to unfold an event called the Nibiru Cataclysm. This is a disastrous encounter between the Earth and a large planetary object (either a collision or a near-miss) which some believe could occur as soon as April or May of this year. Believers refer to this object as Planet X, or Nibiru, a mysterious unnamed planet lurking beyond Pluto. The scientific claims were based on observations of gravitational influences on a group of space bodies termed the “extreme trans-Neptunian objects” orbiting our Sun beyond the planet Neptune. The name “Nibiru” is derived from the works of economist Zecharia Sitchin and the author of several best-selling books on Babylonian and Sumerian mythology.

Nibiru, sometimes referred to as Sitchin’s “12th planet”, passes by the earth every 3,500 years or so. The notion of approaching cataclysm was put forward in 1995 by Nancy Lieder, a woman from Wisconsin who claims an ability to receive messages from extra-terrestrials through an implant in her brain. She says she was chosen to warn mankind that the object would sweep through the inner solar system in May 2003 (a date later postponed) causing Earth to undergo a physical pole shift that would destroy most of humanity.

With me so far? It gets worse. This time of horrible Reckoning is held by some to herald the return of the Anunnaki, aliens from Nibiru, who will planet-hop to the earth and bring mayhem and destruction. If you thought the Nibiru Reckoning was bad enough, you don’t want to be around when the Anunnaki arrive. I relate all this because the consensus prediction of economists for 2016 is that we are headed for a very average year – no collisions, no cataclysms. The consensus forecast as plotted by the Treasury is for UK GDP growth of 2.4 per cent, close to the average of the past 50 years or so of 2.3 per cent and up only fractionally from the figure of 2.2 per cent now posited for 2015.

Oil prices are likely to be muted for a prolonged period while commodity prices are set to remain subdued. On interest rates, some foresee a quarter percentage point rise in May or June. Most predict rates will still be below 1 per cent this time next year. UK unemployment is expected to fall gradually, taking the rate down from 5.3 per cent to 4.9 per cent by the end of 2016. Scotland, wrestling with the North Sea investment slump with cutbacks and lay-offs, may struggle to prevent unemployment from rising.

Given this barely changed scenario, you can understand why believers in The Great Tribulation might want to shake things up a little. We are left with the paradox of why, over long periods, economies can behave in such a muted fashion, veering close to the average of previous years and yet at the same time, the predictions of economists can be so wrong. One reason is that forecasters, obsessed with models constructed on previous behaviour, can be blind to outlier events such as the global financial crisis of 2007-09. In fact, recessions as a whole are very difficult to predict. Rather like Nibiru, they can come out of a clear blue sky, so that those few who claim to predict them are often dismissed as cranks and misfits.

So what could possibly go wrong in 2016? Setting aside galactic catastrophe for a moment, take, for example, that most closely watched indicator, the government’s budget deficit. Barely six weeks ago, Chancellor George Osborne was assuring us that Public Sector Net Borrowing would continue to fall in 2016 and beyond. He drew on forecasts from the Office for Budget Responsibility. These brushed aside disappointing borrowing figures for October and proclaimed that government borrowing would fall to £68.9 billion for the financial year to April 2016.

Then came very disappointing figures for November. These showed that government borrowing, far from falling during the month, widened to £14.2 billion compared with £12.9 billion in November 2014. If the pattern of the first eight months of fiscal 2015-16 is continued over the rest of the year, Public Sector Net Borrowing would come in at £81.2 billion – way above the £68.9 billion forecast in the Chancellor’s November statement.

There is another deficit on which to be vigilant – that on UK trade. The UK’s deficits are the worst in the G7. A continuing strong pound and weakness in Eurozone export markets mean that goods exports are continuing to struggle into the final quarter of 2015. Our current account deficit has been building for years. It widened to £92.9 billion in 2014, a record 5.1 per cent of nominal GDP. These persistent and widening deficits are leading to a deterioration in the UK’s net international investment position (gross assets minus gross liabilities). The end of 2014 deficit here is estimated at £454 billion.

The huge and worsening current account deficit with the EU is set to feature strongly in the argument over Brexit. If membership is so beneficial to UK trade, why has this deficit not only persisted, but increased? Superimposed on these are heightened apprehensions over international terrorism and geo-politics in 2016, vulnerability to cyber-attacks and continuing questions over the health of China’s economy.

There’s enough for us to be on guard in 2016 without invoking those dire warnings about the coming galactic apocalypse. But don’t hold me to this. I could be wrong.