A year of growth, strong markets and trade deals, they claim. And if it all goes wrong? | Business
The year that is just coming to an end was the nearly year. There was nearly a global recession. There was nearly a full-blown trade war between the US and China. And Britain nearly left the European Union.
In the event, none of things happened and 2019 will go down in history as one of those that are soon forgotten. Unless, of course, it proves to be like 1913, one of those when – in retrospect, at least – it is possible to see the signs of a perfect storm brewing.
All the elements that might constitute an almighty downpour in 2020 were visible as the old year drew to an end, with December witnessing four events that will help to shape the coming 12 months.
The first of these, chronologically at least, was the neutering of the World Trade Organization as a body that can settle disputes between its member states. The WTO’s appellate body needs to have three judges in post in order to function, but in early December found itself down to just one because the US has refused to sanction replacements when existing judges come to the end of their terms. This may sound arcane, but it is a body blow to the multilateral trading system.
The second event was the UK general election, which resulted in a convincing victory for Boris Johnson’s Conservative party. Until 12 December, the question of whether Brexit would actually go ahead remained in doubt.
That is no longer the case. The UK will leave the EU on 31 January 2020, and the government says it is confident that it can conclude a trade deal with Brussels before the end of the year. That looks to be an extremely tight – some would say impossibly ambitious – timetable, with bags of potential for problems at a time when neither the UK nor the eurozone economies looks especially healthy.
Event number three was the lack of any significant progress at the COP25 climate change meeting in Madrid, a failure that was brought into sharp relief by the ongoing heatwave in Australia, which has seen temperatures hit record levels.
The final piece of big news as 2019 drew to a close was the strength of financial markets. Global bourses were boosted by the first signs of a de-escalation in the trade dispute between the US and China, and by the knowledge that the world’s leading central banks have absolutely no intention of raising interest rates any time soon.
Central bank governors such as Mark Carney at the Bank of England and Christine Lagarde at the European Central Bank have been telling banks, pension funds and insurance companies that they need to take account of the risks posed by climate change: for now the markets are far more focused on when Donald Trump and Xi Jinping will sign a phase-one trade agreement.
The benign view of 2020 goes as follows. After a rocky patch in 2019, global growth is starting to pick up and will continue to be supported by loose monetary policy. Trump will kick off his re-election campaign by announcing a trade deal with China and share prices will keep going up.
Alternatively, 2020 is the year when the chickens start coming home to roost. Financial markets work out that the trade war between Washington and Beijing is going to be long and bitter. Central banks prove to have limited ammunition when growth starts to disappoint. Negotiating a post-Brexit trade deal turns out to be much tougher than Johnson expects. Evidence of the worsening climate emergency continues to mount. The crisis at the WTO becomes symbolic of a backlash against globalisation.
It would be folly to assume that all will turn out well next year. The world could be heading for economic, financial and environment crises. Rarely has it looked less well-equipped to cope.
Retailers need to think outside the Boxing Day sales
Whither the Boxing Day sales? The era of 24-hour online shopping means the traditional 26 December spree is no longer the fierce scrum over discounted coats and boots it once was. This year, crowds were some 9% smaller than in 2018, according to retail analyst Springboard – a disappointing showing not helped by heavy rain soaking parts of the country.
But if retailers want to blame anyone for Boxing Day looking shop-soiled, they should look no further than themselves. Sales are not the gold dust they once were; indeed, some struggling fashion chains have been running promotions since the autumn. The diehards were still queuing at dawn on Thursday morning, outside Next of all places, but that is because the chain’s anti-discounting stance makes its sale actually worth getting out of bed for.
For shoppers, the imported US phenomenon of Black Friday, which predominantly plays out online rather than in-store, is the latest thing. This year, the late-November promotional blitz appears to have pulled forward spending that would traditionally have taken place in December, leaving consumers with less money in hand now.
Shops can open for long hours in the run-up to Christmas. The frenzied buildup is hard for staff, many of whom earn the minimum wage, and the stress takes its toll on family life. In a poll by trade union Usdaw, three-quarters of shopworkers said they ended up spending too little time with their loved ones.
The old retail playbooks are dead, so perhaps a new decade requires fresh thinking. Social media chatter suggests members of the public are sympathetic to stores remaining closed on Boxing Day, for instance. So maybe retail managers should listen and give their staff a well-deserved day off.
Rail passengers deserve better
Only the distractions of elections, Brexit and Christmas, allied with rock-bottom expectations, can have saved the rail industry from more ignominious headlines. On at least four franchises – Northern, TransPennine, South Western, West Midlands – punctuality has plummeted and disruption has become a daily norm.
Rail leaders professed to have learned the lessons of 2018’s chaotic timetable change, but similar failings have been apparent again: in the West Midlands since this May’s timetable overhaul, and across the north, where new trains were supposed to underpin a new December timetable.
Throw strikes on South Western into the mix and passenger misery is all but complete – awaiting only a further above-inflation fare rise to take effect on Thursday.
Paralysis in Whitehall, which has been largely devoted to ameliorating the self-inflicted pain of Brexit, is obviously not unique to transport. But rail has had its own particular alibi for inaction: the Williams review, inspiring a 15-month bout of navel-gazing, contemplating its own implosion. Even the most fervent advocates of privatisation now accept that the current franchise system isn’t working.
The big question is whether what comes after franchises will be any better. Former BA boss Keith Williams has noted, before the publication of his review, the importance of accountability. As mayors call for train operators to be penalised for shoddy service, those firms – though far from blameless – can justly point to delayed infrastructure works and consequent problems with rolling stock and crew training – not to mention franchise specifications that made strikes inevitable. On-the-ground problems will not be solved by a remote restructuring. But an overarching body running an integrated railway, removed from ministers or lawyers, will encourage straight talking about where the problems lie – and how they can be best resolved before passengers lose faith entirely.