Saturday PS: Hello, hello, they're back again!
FUNNY how all those things about which we were told we need worry no more seem to be making a comeback.
Unemployment was supposedly banished by our flexible labour market and astringent benefits regime. Now it's surging, the direct result of panic measures to control the Virus of Mass Destruction urged on the Government by pointy-headed "experts". That's what happens when you have a Prime Minister who wouldn't say boo to a quack.
Inflation was supposedly dead, killed off by a combination of globalisation and the wonders of independent central banking. Now it is tipped to rise markedly.
Government debt was, apparently, nothing to worry about. Ultra-low interest rates made heavy borrowing the prudent course of action (as Anthony Burgess said of the price of cigarettes on one of his overseas sojourns, you couldn't afford not to smoke). And anyway, the central bank could conveniently print the money with which to buy the bonds issued.
In the words of Prefect Renault in Casablanca: "They put it on the bill. I tear the bill up. It is very convenient."
Now, however, gilt yields are set to rise, the price of persuading foreigners to lend us the money we need to maintain the style to which we have become accustomed.
That said, the early-warning bell suggesting our international creditors are experiencing a sense-of humour failure is likely to sound first in sterling's performance on foreign exchanges. Here, the auguries are already worrying.
The sterling/euro rate a year ago, on January 24, was €1.1855. Now it is €1.1242.
Thanks to the excellent research firm Consensus Economics, we can see how City, academic and independent economists see things panning out. The average forecast for the Consumer Prices Index is for 1.5 per cent this year and two per cent next year.
For unemployment, the average forecast is for 6.8 per cent of the workforce this year and 5.9 per cent next year. Public sector net borrowing is predicted, on average, at a staggering £196.8 billion this year and $138.8 billion next year.
Most astonishing, perhaps, given that our borders are semi-closed, is the average forecast for the current account deficit: £73.7 billion this year and £77.8 billion next year.
There you have it, ladies and gentleman, the twisted wreck that is the British economy. It wasn't in great shape before the VoMD, but assorted lock-downs seem to have finished it off.
1) Saturday bits and pieces
HOW convenient that yet another "deadly mutation" of the coronavirus should have emerged just as we were looking forward to some easing of restrictions. Previous "new variants" are said to have come from Brazil and South Africa. Why not claim the next one came from outer space? Michael Crichton's 1969 novel The Andromeda Strain, filmed in 1971, explored precisely this theme. Maybe the Prime Minister and his kidnappers (sorry, "advisers") should mug up on it before their next press conference.
THAT said, the ground was being laid even before this "new variant" to soften us up for the admission that "all over by Easter" was a lie. On Wednesday, The Daily Telegraph carried a story headed: "Public against rush to re-open, say Ministers." Presumably they are relying on the same opinion polls that, had they been accurate, would have seen Ed Miliband beginning his second administration and Britain still in the European Union.
I hope the railway industry bounces back from all this nonsense in reasonably good health. Yes, I have moaned about the horrors of commuting, not least the fatuous announcements of the "See it, say it, sorted" variety. But over the winter of 2019/2020, I have a problem with my right foot that made it hard to navigate staircases and to get on and off trains. From train crew and platform staff, on both the railway and the Tube, I experienced nothing but kindness and assistance. May their jobs be safe.
BACK in May 1966, Private Eye published a spoof "Swinging London" supplement. Being five at the time, I don't remember it, but my parents passed it on. One article is headed "The English Press: boring, hack-ridden, the best in the world." This came back to me recently surveying the quality end of the market. Maybe there is a wholesaler somewhere supplying those heavy-bottomed opinion pieces that all read the same and cover the same ground: why the time has come to stand up to China; vaccine or no vaccine, things will never be the same again; Angela Merkel will be a very hard act to follow; Joe Biden has his work cut out to re-unify America. What's that? Sorry old man, nodded off there.
FINALLY, a film director (I forget which one) mentioned one or two of his less renowned works. As with children, he said, you love the least successful ones the most. Of the five books I have co-authored with Larry Elliott, I (and he) long thought that perhaps the weak sister was Going South, published by Palgrave Macmillan in 2012. In it, we suggested Britain was best looked at as a Third World economy, exhibiting a huge trade deficit, a reliance on imported capital, political instability (then, as now, it seemed probable that Scotland would break away), a mendacious political class and chronic economic problems. I think we both thought we had over-egged the pudding. After the events of the past year, maybe the problem is one of understatement.
Thanks again for reading and enjoy the weekend.
atkinsondan323@gmail.com
Europe Didn't Work, by Larry Elliott and Dan Atkinson is published by Yale University Press