The Observer's commentators seems to have summarised the prospect's for 2016 quite well today.
Larry Elliott appropriately points out that many of the changes in the global economy, and most especially the fall in oil prices, should be suiting the UK economy and yet few, including George Osborne seem to think that is the case. Of course those seeing downside risk, including me, may be wrong, but if we aren't then, as Larry says:
So what happens if the first week of 2016 is more than a temporary wobble? More quantitative easing? Negative interest rates? Helicopter drops of money? Nobody really knows. As Sir Alex Ferguson once said: this is squeaky bum time.
Then there is Andrew Rawnsley, who I by no means always agree with, who says:
This is going to be a political year like no other I can think of. There have been plenty of occasions in the past when one or other of the major parties has been at war with itself, but not both at the same time. It will be blue on blue over Europe. It will be Labour versus Labour over the deterrent.
I think Rawnsley is right in the likely reasons for schism in the Conservatives but less so in the case of Labour. If the nuclear deterrent is the supposed cause for a split in that party it would just be a metaphor: the schism is along neoliberal and heterodox economic lines in reality, hence the battle between John McDonnell and Progress, where I am quite sure John's language reflects his views and those defending Progress are neoliberal to their core, even if in Labour (or are what my friend Howard Reed calls LINO: Labour In Name Only). Nuclear weapons are a convenient battle over which to fight.
William Keenan then rightly points out that of all the ‘cocktail of dangers' facing the UK economy by far the most dangerous is the austerity George Osborne will impose. As he notes:
In a survey of more than 100 “economic thinkers”, the FT found that nearly half the respondents were concerned about the chancellor's dependence on household consumption to fuel the recovery, with the resulting trade and current account deficit, but “one concern was notable by its absence”. The FT went on: “Just three respondents cited the fiscal deficit as a big worry.” Repeat: just three, even though it has been the overriding obsession of the chancellor, a largely supportive press and, I regret to say, many BBC interviewers.
And finally there is Will Hutton noting the importance of the challenge in integrating millions of refugees into Europe and the perils of failing to do so that will be exploited by the Right:
The extreme right has seized on events [over the New Year] as proof positive that Germany must stop accepting refugees immediately or otherwise face an “impending cultural and civilisational collapse”, as the populist Eurosceptic Alternative für Deutschland puts it.
It's not a pretty prospect.
And in the immediate future it is the only one we have got.
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Yes 2016 will be a year like no other!
With a thoroughly corrupt leadership at Washington run by the crooked Big Banks over there, we’ll be lucky to avoid
1) A banking collapse
2) Involvement in a major spreading out from the Middle East.
3) The fall out from a “Civil War” in the USA – I always thought surender of guns was civilised and decent thing to do, but I have change my view given that a disarmed Citizenry are the prey of evil and tyrannical govenments that are not under their democratic control!
Oh come on Nick
The third is no credible
The way I see it it is all about plutocrats v democrats, in both parties, and the fall out expressed in the increasing polarisation in the wider society is the predictable consequence of neoliberal success. When plutocrats run things you get very deep divisions. We saw this in the 1930’s to give but one example. And racism and war were the outcome. This suits the elite quite well, no matter what they say.
The post war consensus worked because it acknowledged irreconcilable differences between the classes and people agreed that in order to avoid another war they must manage those differences. Compromise was essential, but the consensus was around that necessity, it was not a matter of broad agreement, as now portrayed. Government managed the tensions without abolishing them, and nobody got all they wanted but they did get enough to allow for cohesion. Nobody imagined we were all in it together, which is always a right wing lie.
When things work ok people forget the reasons for the arrangements which make them work. And always the plutocrats wait in the wings for that to happen. Thatcher made it explicit, since she portrayed her “wets”, those who accepted the need for compromise, as “traitors”. The implications were missed by many because people tend to take their gains for granted in one or two generations. And since nothing is perfect they are easily persuaded to focus on what is not so good and seduced by simplistic solutions offered by dishonest ideologues. As an example the removal of other power bases such as trade unions and professional associations is good. Power has been systematically centralised, to the tune of “localism”, for which read atomisation of the opposition in the name of individualism. Government was captured, at first willingly under Thatcher, and later, because of her undemocratic surrender of the role of the state, perhaps more reluctantly. ( though that is debateable)
In short it is not a year like no other: that is mere hubris. It is a re-run of a very familiar play at its core. Only the language and the details change
Well said Fiona
We also have a sizable increase in minimum wage for the over 25s scheduled for April. I think that (like falling oil prices) this should be a substantial boost for the UK economy.
Originally Osborne may have proposed this as just as a mitigation of his attacks on tax credits and benefits, but I’m not sure whether this is still the case after the climb downs.
It is hard to quantify whether the positive effect of a NMW increase can compensate fro all the stupid Tory cuts, and the economic threats that are exacerbated by austerity masochism.
The falling oil price ($115 a barrel in August 2014 – $33.85 a barrel at close of play last Friday) is down to lack of demand due largely to the majority of non elite
workers having insufficient discretionary spending power following 40 years of an ever widening gap between wage levels and profit levels.
2014 stats. for production costs range from around $4.5 a barrel in Kuwait through to $39.2 a barrel in the UK. Even the Saudi’s at $5 a barrel production costs are struggling. With storage facilities for crude and refined oil products entering a period of the year when they are close to full capacity the price is likely to drop further. Meaning that its brown trouser time for everyone as it is not exactly quantum physics to work out the system wide implications of an energy dependent system when the production costs of producing oil start to get close to or higher than the price one can get for it.
This will have implications across a range of sectors. Despite the household model nonsense which Osborne comes out with no company carries zero debt and as companies struggle with the impact of the drop in prices of commodities such as oil, amongst other commodities, expect a knock on effect on financial institutions that are bankrolling many of the unpayable private sector debts as company after company struggle.
The disputes inside the LP cannot be reduced to differences on economic policy. The arguments over foreign policy and security have their own dynamic. The same people can often be found on opposite sides in both cases and a underlying different worldview links economics and defence for both strong supporters and opponents. But that doesn’t mean we can argue against bombing Syria or replacing Trident just by repeating arguments against austerity.
Outside the core camps, views among party members are diverse and even more so within Labour’s electorate. It’s not hard to find people who oppose Spending cuts but still believe we need a nuclear deterrent. History suggests it will be harder to manage differences on security issues and we have already seen signs of this in the current Parliament: there were disagreements over the fiscal charter but not the trauma we experienced over air strikes.
Agreed. What we see is that the Trident issue is far more divisive for Labour that anything else. Labour needs to quickly get through its defence review, unite around a stance of keeping Trident, and then get on with the more serious business of offering an economic alternative that will help people prosper. Any on the economy the message is simple, inequality is bad for everyone because it depresses growth.
When considering the economy, in this context, expenditure of anything from £100 billion upwards on one item (Trident) is neither inconsequential or something which can or should be swept under the carpet.
In reality the two issues cannot be separated. Particularly when global, regional and state level economies are experiencing anything from contraction through to tanking and tottering on the edge of are cliff.
It’s not as though we have any actual control over the system, which is in reality controlled by the US military industrial complex and represents a drain on our resources and a nice little cash cow earner for US “defence” corporations. It cannot, except in the minds of sociopaths, be used without a species survival level blowback threat and it’s function is as a threat rather than any defence, which is an argument which no longer stands serious scrutiny.
On the basis of a picture paints a thousand words imagine a sheer cliff with a plank of wood on the top, half of which is hanging over the cliff. Standing on the end on solid ground is a thin dishevelled worker in threadbare clothes and zero hours contract in one hand (On Tim Worstall £0 minimum wage rate, naturally) and a bailiffs notice in the other. At the other end of the plank, overhanging the sheer drop, is a Trident supporting Labour Grandee (representing all those still willing to die in ditch to retain the albatross around our necks) pointing a Trident missile at his fellow citizen demanding ever more resources for his favourite toy.
We cannot afford the nonsense any more and any economic review or policy which tries to sweep this under the carpet is not worth the paper it is written on.
It is not possible to unite around a stance of keeping trident, nor yet of scrapping it. What you really mean is one side or the other should be silenced. It is not at all obvious why it should be those who wish to get rid of the expensive, dangerous and ultimately useless junk. It is hardly trivial to either side.
I should have made it more explicit that I am opposed to the renewal of Trident, which does not add to our security, weakens the case against WMD at a global level and will consume resources needed elsewhere. But the security debate is not just the austerity debate in a different guise.