It’s certainly been an eventful year. But rather than dwell on the past, what sort of things can we expect in 2017? Here are a few eclectic predictions.
Sweden may become the world’s first cashless economy. Notes and coins are already fast disappearing as a means of payment, and retailers are legally entitled to refuse to accept them. Cash transactions make up less than 2 per cent of the total value of transactions in the Swedish economy. Over half of bank branches have no cash in hand and refuse to accept cash deposits. ATMs are increasingly hard to find.
The central bank, the Riksbank, is well advanced with its plans to launch its own digital currency, the e-krona. If this idea is adopted more widely by central banks, and it certainly feels like one whose time will come, where will this leave Bitcoin? Possibly as the international criminal’s e-currency of choice, possibly for use as baby sitting tokens, or equally possibly, it will become extinct.
Switching tack, there may be quite a lot of sympathy for the antics of the rail unions next year, certainly more than the Tory MPs demanding government curbs imagine. The long-suffering commuters of Southern will disagree with this point. Others, however, might look at South West trains, their near neighbour, and wonder how they manage to run a successful and profitable franchise without having driver-only operation of trains.
More widely, anti-globalisation sentiment is unequivocally on the rise. Any liberal still baffled by the US election might usefully read a paper in the July 2016 American Economic Review by Justin Pierce of the Federal Reserve and Peter Schott of Yale. They show that the sharp drop in US manufacturing employment after 2000 can be attributed to a change in US trade policy that eliminated potential tariff increases on Chinese imports. The electors in the rust belt states are the ones who suffered most.
The trade unions in recent decades have often been their own worst enemies, and have behaved stupidly. But sentiment is shifting, and the Prime Minister needs to be cautious.
Thinking of trade unions, readers of a certain age will recall the miners’ leader, Arthur Scargill, and his ludicrous attempts to conceal his essential baldness with a comb-over. President-Elect Trump, in contrast, has a truly marvellous barnet. His front-combing appears to defy the laws of gravity, just as his election appeared to defy the conventional laws of politics. Perhaps with Trump’s stylist, Scargill would have won the miners’ strike.
The crucial question is the hair style of Mark Carney. The crisp short-back-and-sides, with the immaculate side parting, is the epitome of the Daddy on the Daddies Sauce bottle of the 1950s and 1960s. Is this the real forward guidance which the governor of the Bank of England is trying to convey to us? That he expects a restoration of the economic conditions of those decades? GDP growth averaging 3 per cent a year, the government finances in balance, booming living standards, and unemployment of only 2 per cent. After Brexit, anything is possible.
Paul Ormerod
As published in CITY AM on Wednesday 21st December
Image: bitcoin by fdecomite is licensed under CC by 2.0
