Thursday, January 01, 2009

Best and worst political predictions for 2009:

It's been amusing to look through various predictions which political pundits are making about the new year.

The most incoherent and inconsistent set of predictions is made by James Mackintyre at The New Statesman and can be read here.

Mr Mackintyre is not optimistic about the UK or US economies and writes that

"The economies of both the US and the UK will, as Barack Obama has warned, get worse before they get better, with the house-price crash continuing and unemployment in the UK passing the totemic three million mark."

He adds that

"The UK recession will deepen with a series of industrial crises, particularly for the car industry as General Motors goes bust and Vauxhall and Honda pull out of the UK. The construction and retail sectors will continue to suffer declines in demand."

James Mackintyre thinks it likely that the Labour party will be punished in the opinion polls and local & European elections in the first half of the year as a result, but he somehow manages to combine this view with the belief that

"By the end of the year, the two main parties will have switched positions in the polls, with the Conservatives heading into 2010 languishing below 30 per cent."


"The Liberal Democrats will continue to drift downwards in the polls"

In other words, he thinks that while the economy is in a dire mess the Labour government on whose watch it has happened will have a huge opinion poll lead.

Now I'm not taking anything for granted: I don't think any party can afford to be complacent about the next election. But it's not that common for a government to build up a big polling lead during a recession, especially if they've spent the previous few years boasting about how their supposedly brilliant economic management has ensured "no more boom and bust"

If Mackintyre produced the least intelligent set of predictions for 2009, the most interesting and probably the most intelligent, came from Robin Lustig at the BBC which you can read here.

I particularly appreciated the start of his piece, which was the following quote from Financial Times columnist Michael Skapinker:,

"What happens next? I do not know. Nor do you. Desperate though we are to find out, we should be grown-up enough to admit there is no one to tell us. It makes life hard, but what would we be otherwise? Curiosity about what happens next is an essential part of the joy and anguish of being human."

And taking the mickey out of himself, Lustig followed this quote by saying "very wise words they are too. Nevertheless, fool that I am, I shall ignore them."

A third set of predictions came from Iain Dale here:

1. There won't be an election.
2. Unemployment will top 3 million by the end of the year.
3. Damian Green will not face charges.
4. Ed Balls will be Chancellor by the end of the year.
5. Ken Clarke will join the Shadow Cabinet. David Davis won't.
6. The Independent will go out of business.
7. There will be a second massive recapitalisation of the banks.
8. Lynne Featherstone will be promoted to a major job on the LibDem front bench.
9. Jonathan Ross will leave the BBC.
10. The economic growth rate will be three times worse than the Treasury has predicted.

I suspect he has most of these right. The last of the four sets of predictions comes from Adam Boulton at Sky News here, although he's called them "Ten provocations" and I'm going to make a few comments (not exactly fisking as I agree with some).

1/ There will be no UK General Election in 2009.

All four of the commentators whose predictions I have quoted agree on this one: but if Gordon Brown thinks he can win an election he will call one. What he won't do is repeat the mistake he made in 2007 of allowing a head of steam to build up for an election and then looking like a coward when he didn't call it. He will be looking for an opportunity to catch the Conservatives by surprise, and we must not - and won't - give him that opportunity.

I would not be in the least surprised if the briefings Gordon Brown has given the press that there will be no Spring election is disingenuous and that he might call an election with the vote as early as the end of February if the polls in January look promising.

Whether the election is in February, March, June, Autumn, or in 2010, the Conservatives have to be ready, and we will be.

2/ Jacqui Smith will be replaced as Home Secretary.

On the basis of her competence, or lack of it, she certainly deserves to be, but that has not usually been the criteria in this government.

3/ George Osborne will be replaced as Shadow Chancellor.

No. He's had a huge part in the strategy which took the Tories off the "flatline" of around 30% we'd been on for nearly a decade before David Cameron's election. That's why Labour and their friends in the media want his scalp, and we'd be mad to let them have it. And note that Ken Clarke - the strongest alternative candidate for the job of shadow chancellor - has publicly stated that David Cameron would be making a mistake to move George Osborne, even to give the job to himself, for precisely that reason.

4/ The Obama Administration will give priority to the Israel-Palestine Peace Process.

After the economic crisis, yes. Wouldn't you?

5/ The Irish will vote "Yes" on the EU treaty.

There will certainly be a huge attempt to bully or bribe them into doing so, but I wouldn't bet your shirt on this succeeding. People don't like being manipulated.

6/ The Pound will be worth more than the Euro next Christmas.

Probably. But I have a slightly different prediction on this one, and it applies over more than one year. There will be periods when the Euro looks strong, as it does now, and economically illiterate supporters of British entry to the Euro will argue that means we should go in. There will also be periods when the Euro drops, and economically illiterate opponents of entry will argue that this means the Euro has failed.

But the real economic argument for or against scrapping the pound and adopting the Euro has nothing to do with whether the Euro is high or low at any given point in time. It's about two main things

* Whether the benefits of a more stable exchange rate with the Euro-zone, and lower transactions costs for trade with the Euro area, are offset by the costs of less stable interest rates and less stable exchange rates with the dollar zone, and

* How likely it is that the interest rate policy required for the EU will be wrong for Britain because, as the saying goes, "one size does not fit all," especially because of differences in our housing and financial markets and if Britain is at a different stage of the economic cycle to the rest of Europe.

I am inclined to agree with William Hague: it looks most unlikely that a dispassionate analysis of these questions will make it look to be in Britain's interests to join.

7/ Labour will be further behind the Conservatives in the opinion polls next Christmas.

Probably, but we can't afford to be complacent.

8/ The Liberal Democrats will win a parliamentary by election.

Don't know - but I'll bet Labour will lose one.

9/ Either Tony Blair or George W Bush will start studying for holy orders.

10/ President Sarkozy and Carla Bruni will have a child (perhaps by adoption).

No comment - but would you want to confess your sins to any of them ?

Happy New Year !

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