My Forecast for 2024
Things desperately need to get better...
I thought I would throw my hat into the ring as a forecaster as well as a commentator. My thoughts about what 2024 might hold follow. I’m afraid it’s not comforting, although with an elections in the US and the UK the outlook for 2025 might be better. (Of course, it might be worse).
I should add that I have successfully forecast at least 10 of the past 5 recessions, so don’t despair!
The United States
Although the vote isn’t until 5 November it’s already clear that the loser is the American people. The unedifying suite of lawsuits against Trump are hardly an indication of a thriving democracy. If Joe Biden is the answer someone asked the wrong question. The USA will be less united in December than it is now. It will also be more in debt.
When I was 18 the US national debt was 30% of US GDP. It’s now some 110% at around $35 trillion dollars, higher than it has been since the start of the Korean War. Paying the interest to service that debt costs the US some 15% of it’s Federal Budget, about the same proportion as defence. While US hegemony makes default unlikely, the enormous debt acts as a major drag on the US economy and a cause of annual political hiatus as US Treasury spending approaches the debt ceiling. This constrains the ability of the United States to act as world policeman, or even world leader.
Whoever becomes the 47th president faces an economic mess, a fractious electorate and a world full of problems. I think it will be Trump, which means the New York Times, The Guardian and the BBC will go into meltdown – which I for one will enjoy watching.
Ukraine
The awful truth is that Ukraine lacks the military means to eject Russian invaders from the territory that they occupy. That much has been true since the little green men invaded Crimea and the Donbass in 2014. Dislodging well dug in troops is a huge military challenge. The preferred military option, to outflank them, is not available to Ukraine so it’s only hope lies in creating overwhelming forcer and firepower in a narrow sector. It has been unable achieve this to date.
The only change in 2024 is that it will have some F16 fighters, perhaps 18 out of a promised 60 or so but they are not a magic bullet. Defeating the entrenched Iraqi Army in the first Gulf war required a six week air campaign that comprised over 100,000 sorties, dropping a total of almost 90,000 tons of explosives before the ground offensive started. Adjusting for the smaller size of the forces engaged the Ukrainians would still need to fly 25,000 sorties. That would take months or years, not weeks. And of course the Russians have effective anti-aircraft systems; the S-300 and S-400 are formidable.
The best chance the Ukrainians have is to isolate the Russians in Crimea by driving to the shores of the Sea of Azov and destroying the Kerch bridge again, which would give them something to negotiate with. The problem is that anyone who can read a map can see that, so the Russians have dug in, in depth. If the F16s can’t deliver the necessary firepower to achieve this breakthrough then Ukraine is lost and that leads to bigger problems for Europe and the UK (see below).
Russia
The Ukraine war is sapping Russia’s manpower, workforce and economy. The extent of the economic damage depends largely on what source you choose. The IMF predicts GDP growth of 1.1% in 2024, compared to shrinking by 2.5% in 2023. Western sanctions may be biting, but they are far from devastating and are neither crippling Russia’s economy nor its war effort. Ask any Ukrainian.
Putin is unlikely to be toppled and even less likely to retire. Whether he is prepared to enter negotiations on a territory carve up only he knows. Whether he would stick to any such carve up is also an unknown. His special military operation has not gone anything like as well as hoped, but it has not been the disaster that some in the west claim. His view that Ukraine is an essential part of Russia remains unchanged and there is nothing that the West can do about it.
Israel and the Middle East
Notwithstanding the invasions of London shopping streets by Labour politicians, assorted morons and other antisemites chanting “from the river to the sea” I don’t see any chance of a ceasefire in Gaza until Israel has achieved its objective, the destruction of Hamas. Once Hamas is destroyed, perhaps by the end of January, I doubt the Israeli Defence Forces (IDF) will withdraw.
It would be lovely if the IDF delivered the rule of law and Israel funded and delivered a rebuilt Gaza strip. that became a thriving resort and community making the most of its Mediterranean coastline, which has served most other countries on that sea’s shores with a healthy income from tourism. That, of course, would require the Palestinians to choose peace, something they have not done since the State of Israel was created by the UN in 1947. (It would also require the western left leaning intelligentsia – a term I use loosely – to think sensibly, again something they have seldom done).
Netanyahu may or may not survive politically but there is little logic in Israel withdrawing, leaving the Gaza Strip vacant for Hamas version 2.
Israel’s fight has already spread to the Red Sea, courtesy of Iran and its Houthi proxies, as well as to its Syria and its northern border courtesy of Hezbollah and Iran. Israel has won wars on both fronts before and will again.
Iran’s desire to undermine the Abraham Accords, which would have brought peace (of a kind) to the Middle East, is a problem for those countries dependent on oil from the Arabian Gulf. The largest such countries are China, Japan, South Korea and India, not the EU or US. While the Iranian’s may choose to target US and EU bound ships no country dependent on Saudi oil is going to appreciate the Straits of Hormuz becoming an anti-ship missile shooting gallery again. 30% of global container traffic and some 12% of all world trade passes through the Suez Canal and Red Sea. Attempt by Iran and its Houthi lackeys to construct this will lead to reprisals. Unfortunately hunting mobile missile launchers is a tricky job, but that doesn’t make it impossible. Iran has set itself on a course against the entire secular world, not just the decadent West and could well end up with fewer friends than North Korea.
China
China’s expansion continues with increasing brazenness. This is, ironically, good news for Taiwan in as much as any attempted military invasion carries far more risk to China than patient expansion of Chinese interest, until such time as reunification makes sense. That does not mean that there won’t be continual military threats, airspace violations and the like – all to focus US and Taiwanese attentions and expenditure. The lesson that China will have taken from Putin’s attempted coup de main is that rolling military dice is expensive and unnecessary if longer term non-military actions will deliver the same outcome.
This, of course, poses huge problems for those nations that have coastline on the South China Sea, which China seems determined to turn into its own Mare Nostrum. The clashes and confrontations will spread beyond the Spratley Islands. All will not be quiet on the Eastern Front.
India
While the UK and India have yet to conclude a free trade agreement (FTA) we already have about £35 billion of trade with India. It could be much more. The FTA has predictably become stuck on immigration terms.
Despite the current Foreign Secretary’s affinity for China the UK has far more in common with India. Legal system, property law and official language for a start. There is a large Indian community in the UK and, of course, both countries play cricket. While some of the UK’s media dislikes Narendra Modi and his right wing policies the fact remains that India is now the most populous country on the planet, its largest democracy and a growing economic power. Left wing angst about the Raj legacy and Hindu nationalism should not get in the way of an ever closer alignment of Anglos-Indian interests.
India’s problem is that while it is the 5th largest economy in the world its GDP per head is a dismal $2,600. China’s is $12,540, the UK’s $48,910 and the US 80,410. To enjoy the wealth of China or Brazil the Indian economy needs to grow by 400% or more. The UK should be a part of that.
Europe
The three challenges of migration, war and economic stagnation will not go away. They bring the fundamental inherent contradictions of the Eurozone into play, as well as the challenges of striking a satisfactory balance between the power of Brussels and the powers of the member nations. The UK’s failure to collapse post Brexit has given succour to the more Eurosceptic parties in the EU, adding another axis to the battles between the creditor and debtor nations of the north and south respectively.
While the US is by far the biggest supported of Ukraine, its understandable frustration with many EU members of NATO and their inability to fund and field credible armed forces gives succour to the ill advised calls for an EU Army. Europe needs battle tanks not think-tanks. Whether Sweden and Finland will regret joining NATO is an open question. If, or when, Ukraine falls Poland and the Baltic states become the front line, with worryingly little military capability or political resolve to their west.
Those facing the human wave of migration from the south dream of the smaller but equally intractable problems of the UK’s migration. As is too often the case in current western democracies, the discontinuity between political rhetoric and the experience of the voter (and taxpayer) is wide and growing. Human rights may or may not be universal, but for most people they start with themselves and their families.
Ireland
Leo Varadkar has manoeuvred Ireland into an untenable position. No longer part of the contiguous EU it’s utterly reliant upon free passage of goods through the UK. While the Windsor agreement delivers this, it does so at the cost of putting a customs border within the UK which many find unacceptable. The result of the UK’s general election might well bring it back into play.
Ireland’s recent assault on the Northern Ireland Troubles Legacy Act via the European Convention of Human Rights is unlikely to thaw relations with the UK. Palmerstone would no doubt have dispatched a gunboat already, but then his Navy had ample warships. For a country that is reliant upon the UK for most of its defence, a fair bit of its finance, much of its electricity and most of its trade Varadkar is biting the hand that feeds. Biden may or may not support Varadkar, but as Zelensky could tell him, that support is not reliable. 97% of the UK population don’t live in Northern Ireland and are increasingly tired of being lectured and taken for a ride by the home of Guinness, blarney and racehorses.
Which is, of course, exactly what Varadkar wants as being a crucial step on the way to the united Ireland that wasn’t delivered in 1922. He won’t get it for a while, but new versions of the Irish Question will start appearing in Westminster – beginning with “What’s so great about the Good Friday agreement?”
The United Kingdom
We’re now in an election year so brace for frenetic headlines on minimal data, leaflets through your letterbox and unlikely promises of wealth from politicians who can’t count. The media and most of the country seem to have decided that a Labour victory is a foregone conclusion. While it may well be the case that the government will change the pundits have been wrong before.
The only person who can call the election is the Prime Minister, currently Rishi Sunak. He seems to be preparing for one in May – by promising lots of tax cuts in the March budget he puts Labour in the uncomfortable position of having to either state that it will reverse them or have their spending plans derided as risible.
As Harold Wilson quipped, a week is a long time in politics, so four months is an eternity. While Labour’s current poll lead is greater than the one that evaporated for Neil Kinnock there are enough numpties amongst the Labour party’s MPs to leave potential for an election losing gaffe. The longer Sunak waits, the more opportunity he gives Labour discipline to break, which is an argument for a later election.
The wild card is Reform UK. They are currently polling at around 10%, the same as the Lib Dems and the current pundit consensus is that at this level they will hurt the Conservatives badly. As I have written before Nigel Farage stalks the election process like Banquo’s ghost.
Mainstream electoral pundits have yet to consider whether Reform will damage Labour. I think they will, not least because Kier Starmer’s Labour and the Whitehall blob abhor Brexit, love net zero and approved of lockdowns. Some 68% of Labour voters voted leave in the Brexit referendum, so they may be less attracted to Starmer than the pundits believe.
Add in the SNP meltdown and the chaos that Labour has brought to Wales and while remains probable that the Conservatives will take a whipping it’s far from clear what the next government should look like. This uncertainty will translate to exchange rate wobbles in the run up to polling day. If that’s in November and thus at about the same time as the US election the wobbles may be complex and substantial. Whether they are as severe as those (wrongly) associated with the Truss budget that gave Sunak his job is an open question.
Of course, most elections are fundamentally about the economy.
Economy
The UK’s economy is, at best, unhealthy. Inflation may be falling but there has been near zero growth, compounded by an overlarge state and soaring annual budget deficits. The chancellor may or may not be able to conjure some tax cuts to curry favour with the electorate but that’s just froth. Those outside the Westminster bubble know it because they are living in it.
With a relatively high cost of money, high personal and corporate taxation, low productivity and a shortage of workers the lack of GDP growth is hardly a surprise. Put bluntly, why would any business take on the risk of investing to expand? Why would any foreign national invest in the UK until the election is over? Absent significant economic growth the tax burden and/or the deficit and/or both will rise further.
There is no evidence that things would improve under a Labour government. Tony Blair claimed “Things can only get better” – but he was wrong. Quite what song Starmer’s Labour will campaign to is yet another unknown. Perhaps “Trouble over Bridgewater” might do.
There is, of course, one thing that a government could do which would reduce industrial and domestic costs while easing the government’s own funding needs. That is to abandon the economic and thermodynamic lunacy of net zero. No current Westminster party is wise or brave enough to do that.
Net Zero
As the scale of the challenge of delivering a net zero economy in 26 years becomes clearer public support will wither. Of course a slew of jargon and a barrage of numbers continues to flow from government, media, activists and cynics like me. I wrote a book to deliver some objectivity, sadly few MPs or commentators have yet read it, or grasped the core essentials.
Hydrocarbons account for just under 80% of the energy that the UK uses. Replacing that with clean, green energy requires a new nuclear power station the size of Hinkley Point (or the equivalent number of wind turbines, plus power stations to cover the Dunkelflaute) to be commissioned every year, along with the supporting transmission and distribution network. There is no sign of this happening and no discussion of how it will be paid for.
While it is true that the proportion of wind and solar power has grown from nothing to 30% of all electricity generated, that totals just 93 Terawatt hours in 2022, or just 5% of the total energy the UK. The current plan is to treble that by 2030, but that still doesn’t ask the fundamental question of where the other 85% is to come from.
Worse, there is no doubt that the UK’s plunged towards net zero has increases the cost of energy. (Subsidies cost money, so does the need to have idle power stations on standby for still days). The high cost of energy is yet another reason for the UK’s lack of growth. Unlike some of the other causes, it could be ended at a stroke by abandoning net zero.
That won’t happen in 2024, but the debate about it will become more heated. Every household and every business pay an electricity bill; they are well aware of the reality.
Migration
Net migration in the UK is out of control, and the boats that Mr Sunak has yet to stop are a distraction, accounting for some 5% of the 750,000 net migration into the UK in 2023. Inevitably the numbers are vague and detail scarce despite the billions Joe Public lavishes upon the Home Office.
A fair bit of the inbound migration is university students (in some cases with their families). The upside is that their fees subsidise those paid by UK students. More come to work in the health service. While this is, apparently, vital for the functioning of the NHS it denudes the countries of origin of the skilled health workers they need.
The downsides to current levels of net migration start with the pressure on infrastructure, from housing through to sewage. Converting buildings designed for a single family into student or workers flats doesn’t increase the capacity of the electrical, water and sewage connections in the street. While migrant workers fill vacancies that the workshy and sick UK population can’t or won’t fill if those migrants are sending money home, as many do, that wealth is not available to stimulate growth in the UK. Unlike the Windrush generation, many recent migrants also do not assimilate, creating cultural problems for a society that had multiculturalism thrust upon it.
Health & Welfare
There are currently 2.5 million working age people in the UK who are too ill to work. That’s one in 25 of the entire population or one in 14 of the 37.5 million of workforce age (18 to 65). If all these cases are genuine the UK’s healthcare is a disgrace. If they’re not 100% genuine then the welfare system is a disgrace too.
The current strikes by junior doctors, who seem more concerned with their pay and terms of service than the Hippocratic oath is, I think, weaning the British people off the delusion that “our NHS” is wonderful. That’s some achievement, given that in 2020 we were imprisoned and the UK bankrupted by covid in order to protect the NHS.
The Hallet Enquiry is working hard to protect the decision makers and their advisors, largely by focussing on the salacious WhatsApp messages rather than asking the key questions of where the virus came from, why the NHS panicked when covid was demonstrably barely more lethal than flu, how the NHS was so woefully unprepared, why we built the unused Nightingale hospitals and why we endured two years of appalling decision making. By the time it reports the government will have changed; lessons will not be learned.
Conclusion
The outlook for 2024 is pretty grim. That leaves us with a choice, we can wail, whinge and suffer or we can do something about it.
I’m for the latter and have therefore become a prospective parliamentary candidate for Reform UK which seems to me the only party that proposes an alternative to the current path to despair.