Five things that will definitely happen next year – and five that just might
We know many things that will happen in 2016. But the most interesting ones are completely unknown, says Matthew Lynn. Here are five that might – just might – happen.
There is an old joke that economists only make predictions so that the weather guys have someone to laugh at.In much the same spirit, once a year this column also makes a few predictions for the year ahead but only so any economists who might be reading have something to giggle over.
There are all sorts of things we all know are going to happen in 2016. The Bank of England will warn everyone it might raise interest rates, and end up leaving them exactly where they are. Lots of Labour backbenchers will threaten to walk out of the party unless Jeremy Corbyn steps down, but won't quite pluck up the courage to actually do it. Several high-street chains will run into trouble, and at least one will close. A giant internet company will be revealed to have paid three and a half pence in corporation tax by channelling all its profits through a space/time wormhole. But it is the things that are not on anyone's agenda yet that will be really interesting. Here are five that could just could happen.
1. Osborne becomes foreign secretary
By the close of the year, George Osborne will have served seven years as chancellor. That is a long time. Gordon Brown only did ten, and he was so burnt out and tarnished by the end of it that he went on to become the most catastrophic prime minister of modern times. Osborne,who plans to make the same switch toNumber 10, won't want to repeat his mistake. At some point he knows his luck will run out. Sooner or later there will be another recession, and if it happens on his watch there will be no hiding place. It makes much more sense to step down, become foreign secretary, lead the campaign to stay in the European Union to victory in a referendum, and then succeed David Cameron as prime minister from there.
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House of Cards. Narcos. Jessica Jones. TV subscription service Netflix has learnt that if you have high-quality, originalprogramming, subscribers will flock to you. The next frontier? Sport. Why not buy into the Premier League, the world's most popular sporting franchise, and start streaming a team's whole season for a tenner a month? Chelsea owner and billionaire Roman Abramovich must be tiring of the headaches that come with owning a football club. It might cost a billion to rebuild the failing side, and it is never so much fun the second time around. Why not sell out to Netflix? With a market value of $51bn, and with Wall Street willing to finance just about anything it wants to do, money is not going to be a problem Chelsea is the most obvious fit. Of course, if Netflix buys Chelsea, it can't be long before Amazon buys Manchester United but that might be a story for another year.
3. Tesco and Sainsbury's merge
Assailed by the discounters on one side, an upmarket Waitrose on the other, with internet retailers snapping at their heels, and now with Amazon moving into groceries, the UK's two mid-market supermarket chains are in a horrible place. They face years of brutal price competition in a shrinking market and if Tesco's Dave Lewis or Sainsbury'sMike Coupe have any idea what to do about that they are keeping it to themselves. But, hey, they can do what big companies in a strategic mess always do. Merge. In the past, a deal would never have got past the competition authorities. But now? They can claim they are in so much trouble there is no other option. With a merger, they can savagely cut stores how many branches of Sainsbury's and Tesco are there close to one another? and start bringing some sanity back to the market.
4. Introduction of rent controls
Higher stamp duty. Higher taxes. The government's war on landlords is inevitably going to drive a lot of them out of the market. What will the result of that be? A big increase in rents, of course (Gosh. Less supply means higher prices. Who'd have possibly thought that could happen!) and lots of complaints about how the market is even more unaffordable than ever. So what to do next? So far, this government's approach to housing has been to treat the symptoms with ever more fiddly and complex schemes. So, heck, why not rent controls next? Just watch Jeremy Corbyn try and oppose that one.
5. Mark Carney quits for the IMF
Christine Lagarde might have been regarded as a safe choice for a second term as boss of the International Monetary Fund when her first spellends in June next year. The small matter of a looming trial in France for negligence will make that difficult. But if not Lagarde, who? Lagarde replaced Dominique Strauss-Kahn, another scandal-hit leader, so what they need is someone smooth, clever, articulate, who says interesting things, without ever being original enough to ruffle any feathers.
Step forward Bank of England chief Mark Carney. He has made a career ofhopping from one prestigious financial post to another and, with his term atthe Bank due to end in 2017, by the summer he is bound to have at least half an eye on his next gig. By now even Carney must be feeling that leaving interest rates on hold every month is getting a bit samey and he probably won't mind checking out of Threadneedle Street a few months early.
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Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years.
He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.
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