Bill Jamieson: A solar flare through the Hogmanay gloom

A new year, a new leaf, a fresh start, a rekindling of hope: what’s not to like as we approach Hogmanay? “Everything!” it seems, as the old year ends to the sound of crashing stock markets, downward revisions to growth, trade and tariff wars… and the resumption of Brexit mayhem.

As if all that wasn’t depressing enough, how about these predictions from Steen Jakobsen, chief economist of Saxo Bank – not the bank’s official forecasts, he stresses, but none the less, who would rule many of them out? How are these, for starters?

◆ A Jeremy Corbyn-led UK government, higher property taxes drawn up, measures to support a universal basic income, nationalisation of utilities, a widening budget deficit, falling business investments and overseas companies and individuals taking flight;

◆ A recession in Germany, and in America a new chair of the Federal Reserve (the present incumbent driven out by Donald Trump);

◆ A debt forgiveness programme by the European Central Bank to forestall financial crisis in Italy and broader disruption across the Euro zone;

◆ A global transportation tax resulting in higher costs and prices to combat climate change;

◆ And, to cap it all, a giant solar flare – a coronal mass ejection (CME). Previous solar storms have disrupted radio and satellite communications as well as ground-based power transmission infrastructure. In 2012 the earth got lucky when it missed a giant flare by a matter of a weeks. Such an event striking the western hemisphere could cost the global economy $2 trillion.

“A world running on empty will have to wake up and start creating reforms, not because it wants to but because it has to,” says Jakobsen. “The signs are everywhere. We think 2019 will mark a profound pivot away from this mentality as we are reaching the end of the road in piling on new debt and next year will see us all beginning to pay the piper for our errant ways.”

Absurd outcomes? But who would dare rule any of them out in the current mood of unease and apprehension over what may lie in store?

Time, then, to count our blessings – all but obliterated in the pall of gloom that has descended over our prospects, and the near hysteria that has come to prevail over the outcome of a “no deal” Brexit.

If, for example, flights into and out of the UK are to be severely disrupted, why has French infrastructure giant Vinci just bought a majority stake in Gatwick Airport, the UK’s second largest, marking a commitment of £2.9 billion?

Why is it, in the face of warnings of a disruption to vital pharmaceuticals and medical supplies, that investment is flooding into the UK life sciences sector at an unprecedented rate? Earlier this month UCB, a Belgian drug maker, announced plans to invest £1bn in the UK – adding the automatic stamp of two words that have come to mark any news event that does not conform to the prevailing gloom – “despite Brexit”?

And what has possessed the influential US business magazine Forbes to rank the UK “the best country in the world in which to do business”. This is the second year running it has done so and, yes, “despite Brexit”. The ranking reflects key business assessments in such areas as property rights, innovation, taxes, technology, lack of corruption and freedom from red tape. All told, despite the near collective nervous breakdown over our prospects, Forbes found no country on earth offers a more attractive base for business than the UK.

Huh! Remote business opinion, we may harrumph. It doesn’t reflect the real world for millions living in Britain. But how is it in the real world?

Numbers of people in work in the UK overall has climbed to a record high of 32 million, an employment rate of 75.7 per cent – the joint highest estimate since comparable records began in 1971 – some 47 years ago.

Average weekly earnings in real (after inflation) terms are rising by one per cent and by 1.1 per cent including bonuses. And the labour market is astonishingly tight: there were no fewer than 848,000 unfilled vacancies between September and November, up more than 40,000 on a year earlier – and yes, despite Brexit.

And people are switching jobs in record numbers. Some 860,000 are reckoned to have moved to a new job in the three months to September – the highest as a proportion of those in employment since the financial crisis. And job movers are typically rewarded with a bigger pay packet, with an average pay rise of seven per cent. Even those who do not move are starting to see faster pay growth as employers have to offer higher wages to keep them in post.

Is Scotland missing out? Not a bit. The employment rate here for people in the 16-64 age group is 75 per cent, up 0.6 per cent on a year ago, while the unemployment rate of 3.7 per cent is lower than that for the UK. Youth unemployment here at 10.1 per cent is lower than that for the UK (12.5 per cent) while employment among women in Scotland is also fractionally higher.

As for overseas investment into Scotland, these have been challenging times given the massive uncertainty over Brexit. But successes there have been. According to accountancy giant EY’s Attractiveness Survey, Scotland remains the UK’s most attractive location for foreign direct investment outside of London. The FDI growth rate in Scotland is higher than across the UK as a whole, while the number of FDI projects has increased.

As for manufacturing exports, these hit £28.8bn by value between the third quarter of 2017 and the second quarter of 2018, a rise of seven per cent compared with the previous period a year earlier. Scotland has the second highest level of manufacturing exports per head of all the countries and regions of the UK.

We may well feel that 2018 has been the rottenest, most miserable year. It has certainly been portrayed as such by a febrile and often alarmist media. But that is not the way that future historians may assess it when a fuller view is taken.

Hold on to all this as we batten down the hatches for 2019.