Will Boris Johnson agree a trade deal with the EU?
Yes. That is his aim and he has a good chance. By announcing the deadline will be set in law, however, the prime minister has set his sights low. It will be near-impossible to negotiate much beyond a bare bones deal covering trade in goods during the time available. Mr Johnson has emphasised his aim is to remove tariffs and quotas on all goods trade. The EU27 also have an interest in such a deal; collectively they have a large surplus in trade in goods. But there will be pitfalls. Watch out for French insistence that fisheries be included in any deal and that Britain give assurances that it will not seek to undercut EU standards on labour and the environment.
Will Britain’s Labour party return to electability?
No. Labour’s outgoing leaders have recommended a “period of reflection” on the way forward for the UK’s main opposition party after its worst election defeat since 1935. Those still in the party who feared or warned that having Jeremy Corbyn in charge would end this way — and those moderates rushing to rejoin in order to have a vote in choosing the new leader and deputy — may be disappointed, however. Recrimination and factional battles will take a long time to play out. So far, the leadership hopefuls are being careful not to repudiate the sharply leftward journey under Mr Corbyn — to win, they may have to promise much of the same. Miranda Green Recommended Culture Call podcast58 min listen Our 2019 cultural roundup: the biggest and best of the year
Will Angela Merkel’s grand coalition collapse?
Yes. Germany’s chancellor will struggle to keep her “GroKo” intact because junior partners the Social Democrats are lurching leftwards. New SPD leaders Norbert Walter-Borjans and Saskia Esken were forced by senior party figures and ministers to soften their anti-coalition rhetoric at the recent party conference. But they were elected on a plan to leave, and their vow to boost spending will clash with Ms Merkel’s fiscally conservative CDU. The SPD might seek to avoid snap elections, fearing a drubbing, and allow a minority government until 2021 when Ms Merkel retires.
Will Matteo Salvini come back to power in Italy?
Yes. After bungling an attempt to trigger early elections in August and finding himself locked out of office, the leader of the rightwing nationalist League is riding high in the polls once again. The coalition that took power four months ago is proving to be as querulous and ineffective as the one Mr Salvini terminated. Defeat for the left in its stronghold of Emilia-Romagna in regional elections in late January will send the government into a tailspin. Even a new anti-Salvini protest movement known as the Sardines reaffirms his pre-eminence.
Will Donald Trump win the popular vote in November’s election?
No. In 2016, Hillary Clinton took almost 3m more votes than Mr Trump yet still lost the electoral college. That margin will be even wider in 2020 yet could still result in Mr Trump’s re-election. Many of the most energised anti-Trump voters live in already-Democratic states like California and New York. Their votes could thus be “wasted”. The real battle will again come down to the smaller mid-western states that delivered victory to Mr Trump last time.
Will the US go into recession?
No — though the question haunts the markets, the White House and US corporate leaders; half of chief financial officers told a recent Duke University survey they expect a recession over the next year. It is easy to see why. No other advanced economy bar Australia has defied the business cycle for so long, and there are signs nervous US companies have been cutting capital spending. However, consumers have remained surprisingly buoyant in 2019. There is good reason for this to continue in 2020 with unemployment still at rock-bottom and jobs being created for the poorest parts of the economy. That, on balance, should keep the economy growing.
Will India regain its status as the fastest growing large economy?
No. India’s GDP growth has collapsed from 8 per cent to 4.5 per cent in the last year and a half due to severe problems in the banking and financial system and the once-booming real estate sector. But Prime Minister Narendra Modi’s government insists India’s economic woes are cyclical and has no credible plan to tackle the challenges. Growth may recover slightly from its current six-year low but India will struggle to regain enough momentum to outpace even a slowing China.
Will there be a war with Iran?
No. Concerns about a conflict between the US, its Arab allies and Iran have simmered for months as the Trump administration has ramped up his “maximum pressure” strategy against the Islamic republic. Tehran has responded with provocative moves — downing a US drone, seizing a British vessel and allegedly attacking Saudi Arabia’s oil industry. Yet despite the belligerent rhetoric, Mr Trump has displayed reluctance to take muscular action. All protagonists insist they do not want war. And with an election looming, Mr Trump is even less likely to want America embroiled in a conflict. Any miscalculation, however, risks inadvertently triggering a broader conflagration.
Will the protests that have shaken Latin America continue?
Yes. Underlying causes of the anger — weak growth, serious inequality and perceptions that governments are ignoring many people’s needs — will not go away. 2019’s upheavals did not respect political colours, hitting market-friendly governments in Chile, Colombia and Ecuador but also felling a leftist president in Bolivia. In 2020, Argentina’s new Peronist president may enjoy a brief honeymoon, but there are serious unresolved crises in most of the Andean nations and Mexico could be vulnerable if its populist leader Andrés Manuel López Obrador proves unable to control rising violence and restart the stalled economy.
Will France’s Emmanuel Macron engineer a ‘reset’ with Vladimir Putin’s Russia?
No. The French president has made ambitious overtures to bring Russia back into the fold. But the path to any broader reset runs through a peace deal in Ukraine — which is unlikely. Ukraine’s president Volodymyr Zelensky was elected in part on a pledge to end the simmering conflict in the country’s east. He cannot agree, however, to Moscow’s demands to grant “special status” to the Donbass — which Kyiv fears would enable Russia to maintain leverage through its proxies there, making the region a kind of cancer inside Ukraine. More limited resumption of dialogue with Russia is possible, though.
Will we see meaningful regulation of big tech?
No — at least not in the huge US market. The path towards the most likely regulation — a privacy bill — is fraught. Democrats want tough rules, and Republicans favour weaker regulation (which won’t get through the House). Meanwhile, the US has pushed big tech legal loopholes, such as a provision that tech companies are not treated as publishers, into the USMCA trade deal with Mexico and Canada, and is trying to make it part of any new transatlantic deals. The EU’s digital supremo Margrethe Vestager wants to connect and strengthen privacy and antitrust regulation. But a precedent-setting case will take years to complete.
Will global carbon emissions fall?
No. Emissions from burning fossil fuels have been growing 0.9 per cent a year on average since 2010 and there are many signs of another rise in 2020. If global GDP grows as forecast we are likely to see rising use of energy, which still mostly comes from fossil fuels. Some of the fastest growing economies will again be big users of coal, the dirtiest fossil fuel, not least China. It emits more CO2 than the US and EU combined, and Beijing’s efforts to stimulate the economy and boost energy security could easily bolster coal use.
Will Brent crude prices end the year above $65 a barrel?
No. Saudi Arabia led Opec, and allies including Russia, in a recent round of production cuts at the end of 2019, propping up oil prices above $65 a barrel. But for crude to remain here throughout 2020 will require producers to stick to their share of curbs, with the kingdom taking the heaviest burden for a prolonged period. Russia’s ongoing compliance with the deal is under scrutiny. While growth in US shale supply growth is forecast to weaken in 2020, production from other non-Opec countries will expand. And Donald Trump in an election year will be keen to enlist the support of his Saudi partners in ensuring prices do not escalate.
Will the three-decade bond rally finally come to an end?
No — though it is right to ask the question. In summer 2019, the asset class experienced a storm of buying that fired up bond prices to the point where $17tn of debt around the world delivered buyers a guaranteed loss. The storm has abated, but still $12tn of bonds are effectively in the deep freeze. Now, investors’ instinct to buy debt on any dip remains extremely robust. We may not see a repeat of the wild summer of 2019 any time soon, but a market rush to the exit seems unlikely as long as central banks stand ready to offer support.
Will Europe’s banks keep slashing jobs?
Yes. Little suggests 2019’s tough operating environment will change soon. Lenders are being squeezed by low or negative interest rates, weak investment banking revenues and slowing economic growth. Banks are also braced for the Basel IV rules, which from 2022 will increase banks’ capital requirements. By December, banks across Germany, France, Spain, Switzerland and the UK had collectively announced more than 60,000 job cuts. HSBC will keep up its cost-cutting drive under interim chief executive Noel Quinn. In Italy, other banks could follow UniCredit, which is cutting 8,000. More jobs could go in the UK, especially if Brexit hits the economy hard.
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