From the euro, by way of house prices, Labour’s electoral woes and falling Olympic gold standards, to the legacy of Thatcher, Pete Martin looks at what 2012 will bring to the average Briton
“PREDICTION is very difficult, especially about the future.” That quip by physicist Niels Bohr no doubt cracked up his fellow scientists while they cracked the atom.
You’ll notice the Nobel Prize winner didn’t say the future was unknowable. He merely noted that making accurate predictions is difficult. It requires skill and foresight has its own in-built challenges.
One man who looked into the future daily – and made a fortune – was legendary investor John Templeton. He considered the four most dangerous words in the English language to be: “This time is different.”
He felt things changed, but people didn’t. The forces that shaped success and failure in the past were good predictors for the future. So, assume that the future will be a bit like the past, only more expensive.
You work from principles: extremes don’t last. Things tend to “return to the mean”, to swing back towards long-term historical averages. Patterns repeat themselves, the next boom begins in today’s bust. It sounds simple enough, but it means taking a contrarian view. And that takes guts.
For example, considering what is probably your own biggest investment, you’ll be heartened to hear that house prices should surge again from 2015. However, for maximum return, you should have been buying when – to most people – investing in property seemed like madness.
Yet, there’s always the unknown unknowns: the law of unintended consequences.
So, here are my predictions for 2012 and beyond. None comes with a money-back guarantee.
Europe: In the Chinese calendar, 2012 will the Year of the Dragon. In European Union, it will be the Year of Chicken-licken. Financial uncertainty will continue to buffet the eurozone, shaking acorns of gloom and doom on to all our heads – until people begin to realise the sky is not falling in. It’s true that, semantics aside, Greece has already defaulted on its bonds. If the larger economies wobble, the entire European financial system could be engulfed in panic. Little wonder that Little England is applauding the way David Cameron jumped off the euro train in a huff, and tore up his ticket. But that only shows how myopic and xenophobic the average “Rosbif” can be. Posterity will see Mr Cameron’s posturing as ill-judged.
The European Union is still the world’s largest economy. The Italian bond issue will be subscribed by investors seeking to recoup due bonds in full, and get a nice uplift on current returns. If it matters, Greece will be gently shoved into a siding. The euro train will puff out of the station and get up a head of steam with France and Germany firmly in the driving seat. We’ll be left on the platform, waving goodbye to an economic juggernaut with the small Union Jack handkerchiefs handed out by Mr Cameron.
Olympics: The 2012 Olympics will be a flop of Fosbury proportions on the economic front too. Tickets will be sold but the event won’t shift GDP or lift the national mood. The benefits will be felt nowhere but London where the main impact will be to inconvenience commuting workers more comprehensively than any Aslef action ever has.
The Games won’t deliver the other kind of much-promised gold either. Hype will overwhelm British hopes to outdo the haul of 19 gold medals from Beijing. Compared to what England Expects, any triumphs British athletes achieve in our specialist subjects of cycling, sailing, rowing and swimming will be as nothing. In sport, as in economic power, China will dominate.
However, unlike any other major sporting event in history, the London Games will leave a legacy that’s incredible in the true sense of the word. By sitting on our couches glued to the Olympics on TV, the entire populace will be inspired to give up our laggard, lard-assed life-styles and become a nation of super-charged athletes – just like the Premiership on pay TV has created a new generation of world-class British footballers.
Even so, during the Olympic post-mortem, we can confidently predict someone will mention the World Cup in 1966, and that “we only win under a Labour government”.
Mrs Thatcher’s State Funeral: Cor blimey – a grocer girl from Grantham being laid to rest like royalty! She’s living the English dream, once she stops living. Tragically, the Cameron government will not be able to resist the opportunity to enshrine its right-wing antecedents in a display of mawkish sentiment at odds with the Blue Baroness’ own hawkish sensibilities. In turn, Britain’s establishment media will attempt to foment a mourning frenzy that will make the North Koreans seem sane.
However, the law of unintended consequences suggests the unreality could force many people to wonder about the real legacy of Thatcherism. We’ll remember the harsh ideological medicine, the bloody-minded management style and, despite claims to the contrary, the under-performing economy. Not to mention the astonishing pelf her family acquired.
Behind the mild Victorian rhetoric, there’s high-handed hypocrisy: prudence for you, bully for me… And then, we’ll take a slow sideways look at Mr Cameron.
The End of Ed: The foregoing might lead you to predict that 2012 will be the year in which the Labour Party gets set for victory at the next election.
But the beginning of the end of Ed Miliband’s leadership starts with a realisation at Labour’s HQ that is obvious to everyone else. Two Eds are not better than one. In fact, no Ed would be better because a party led by Miliband and Balls can’t get elected. And it’s nothing do with their performance, personalities or policies.
If Neil Kinnock couldn’t be prime minister, Ed Miliband won’t be for a similar, simple, depressing reason. It’s the law of the playground.
The truth is that England is not completely racist. It’s rare, but you can come from a “non-English” background and be prime minister. Lloyd George was Welsh. Disraeli came from a Jewish background. Blair was born Scottish.
But, for the unthinking Daily Mail-reading rump of England’s white middle classes, one “social stigma” is merely unfortunate; two seems careless. If you want to be elected prime minister, you can’t be Welsh and ginger. Or Jewish and have a speech impediment. (Or indeed, be Scottish and have anger management issues.) It’s two strikes and you’re not in.
Similarly, like A Boy Named Sue, the other Ed’s surname proves that an unfortunate monicker will make you tough. But, it cannot make you Chancellor of the Exchequer. Quite possibly, Mr Balls could be the best minister for finance we’ll never have. The next battle for the Labour Party leadership starts now.
And finally, the economy. There can’t be a God, or George Osborne wouldn’t be Chancellor. Wreaking ideological havoc on the British economy, Plan A involves most people digging deep. But, unless you have your head stuck somewhere very dark, everyone knows you cannot dig yourself out of a hole.
The trouble is, the Law of Sod says Mr Osborne will never be found out. Later this year, the world economy will come along with a ladder and help the UK out of a hole. And then, like many lucky chumps before him, Mr Osborne will take credit for something that would have happened anyway (or, in fact, happened quicker without him).
Which only proves that prediction from action is not just difficult, but sickening. Fools flourish. Scoundrels prosper. Decent, hard-working folk get a kick in the proverbial shadow chancellors. Happy 2012 – prepare yourself.
• Bone fides