CREATING THE MOOD
Everybody needs hope, and future prosperity is a particular concern. That hope depends very much on mood and sentiment. That mood and sentiment is heavily influenced by the music, and the words, around what the future holds. Especially at this time of year, how the future may shape up occupies a great deal of media space with economists, think tanks, of which today there is a glut, financial people, business leaders, Governments and so-called influencers propounding predictions and official sounding forecasts for 2024 and beyond.
Nobody more so than economists and economic research establishments and self-styled financial gurus whose reports and analyses flood the media. Nowhere is this truer than the UK. And these people and media outlets all have agendas of their own, as well as emotional causes, which in turn influence not just content but also prejudice their presentation of their future wisdom. All this communication goes to create the all important mood. And mood can determine success or failure. In the financial world this is often called sentiment – emotional mood, a feeling, a sense of pessimism or optimism which drives behaviour and so feeds reality outcomes.
SCEPTICISM REQUIRED – FORECASTS ARE FAR FROM FACT
Today the UK is fighting – or every citizen should be fighting – to restore a dynamic, vibrant growing economy and environment , and forecasting, fortune telling or spreading falsity about tomorrow can be a dangerous and invasive enemy. Who is to be believed, or trusted? The evidence of the past gives a guide to why scepticism is required.
At the end of 2022 and the start of 2023, the soothsayers largely had the UK as an economic basket case in 2023, with recessions and economic underperformance compared to peers constantly yelling out from the media: the UK is and would be an economic zombie compared to the EU and others in the G7. Certain highly respected major banks envisaged inflation and interest rates in the high teens . Broken Britain is the most overused untruth, designed to justify attacks on all sorts of people of power, and fuelling depression. Recently a regular commentator in the Daily Telegraph talked of the UK perhaps entering an economic ice age. For months in 2023 until December, various and numerous predictors had placed the UK in recession or imminently going there. It has been as if some malevolent actors were wishing us there. The UK has never been in recession in 2023 and is not now thought to be going there in 2024!
The Financial Times in December recorded the results of a survey of economists: a majority gloomy about UK stagnation in 2024. The Bank of England is highly cautious, no doubt fearful of compounding its errors of recent years and perhaps risking causing further damage through fear of reducing interest rates too early. The IMF has been wrong about the UK economy in almost every pessimistic prediction over the past 5 years and perhaps since the Brexit vote in 2016. It now says the UK will be the worst performing G7 country in 2024.
Yet other respectable institutions disagree. The CEBR considers, as reported on 26 December 2023, that the UK is likely to remain by GDP the sixth largest world economy. The front 5 all have far bigger populations. It further predicts that by 2033 it will be 10% larger than France, and 20% larger by 2038, and making ground on Germany. In the shorter term, for 2024, PWC says it is the year the UK will turn the corner, predicting it will in growth terms be the 4th best performing G7 country, ahead of France, Germany and Japan, even though growth will be sluggish.Probably these predictions will be wrong, along with the more negative ones. Apparently too the UK finished 2023 very strongly in rising services, and the UK is the second biggest international services provider in the world.
Meanwhile the Eurozone was in recession in the early part of 2023 and is imminently at risk of returning there. Again, that is not good news and comparisons are equally misleading, and so we must beware those who compare national performances usually to suit their agenda. Selective statistics are abused all the time by those who would exercise influence whether politicians or commentators or economists. That was surely a lesson of the pandemic.
And predictions can change weekly as latest events are factored in. The point is not who will be right but that all predictions are innately false and must not be presented as strong arguments for anything.
Even if a forecast were accurate, its underlying assumptions are always vulnerable. Today all forecasts are in danger as the Houthi Islamist extremists render the Red Sea and so the Suez Canal sea lanes potentially too dangerous to navigate. If they cannot be stopped, then the diversion of vast amounts of shipping around the Cape of Good Hope will inevitably increase certain prices and prevent inflation reduction, and so interest rate reduction and so on. Nobody before 7 October factored in an Israel/Hamas war and the risks and awfulness that brings. The world has never been more unpredictable in modern times, and so many extremists see opportunity in turmoil as the world’s policeman, the USA, is especially overworked, with the likes of the EU slow to correct their historic strategic ignorance as far as global security goes. But unpredictability must not be an excuse to defer action and tough decisions.
WHAT TO DO
Returning to the UK, whatever forecast one adopts, it is universally accepted that there are huge steps to make if the economy is to grow and become dynamic. The biggest barrier seems a stubborn British inability to be more productive. Of course, some UK businesses are highly productive. At the other extreme, large swathes of public services lack quality and are inefficient. The one thing many individuals can surely contribute is an improvement in their own productivity, but is the will, the motivation there to do so? It will be for some if they see long term reward and enjoyment in doing so. Recent focus on people dropping out of the workforce, thousands in effect self-certifying their mental incapacity to work, and a prevailing bad attitude towards the importance of working and contributing set a bad tone. An acceptance of a culture of dependence and excess, resulting in self-inflicted poor health for many, is perhaps threatening the national ability to resolve our own problems through will and drive. Combine this with gloomy forecasting and the mood is at risk of being too negative, driving down ambition and determination. A different drive is needed to get that mood positive and in forecasting what benefits there could be by making some simple improvements to give hope.
Perhaps people cannot allow their mood and so their attitude, and the feelings they portray to others and thereby influencing them, to be determined by things beyond their control, that is by media and predictions made by others. If we all take control of what we can, particularly our feelings, thoughts, words and deeds, we can determine our mood and to some degree the mood immediately round us. If that mood is dynamic and can-do, will not productivity, and most importantly satisfaction and enjoyment, increase too? The fact is we are masters of our own mood unless we decide to surrender that freedom and privilege to others .
See also CAN-DO APPROACH WILL REVIVE THE UK
