Predictions are pointless – but we do them anyway

We were right on much of what we predicted for this year, but wrong on much of it, too. The only thing we can say about the future is that it is unpredictable.

Woman scanning something at a self-service till
Increasing use of technology should lead to higher productivity
(Image credit: © Alamy)

At the start of 2021 we had some clear ideas on what we expected from the economy and markets. With pent-up demand real – consumers had pockets jammed with newly minted cash and a near-desperate urge to get out and spend – GDP would recover fast. We expected that, alongside staff shortages, to be one driver of non-transient inflation. We thought we might start to see the fruits of the hard labour many companies put in during the pandemic (to cut costs, digitalise, and strengthen supply chains) in the productivity numbers. Finally, we expected interest rates to rise a little (not as much as inflation, but a little); bond prices to fall (as rates rose); growth stocks (dependent on super-low rates for their high valuations) to fall and more value-orientated stocks (UK ones in particular) finally to make our fortunes.

We were right on much of this. The recovery in GDP here and in the US has been stunning. Wages have been rising and inflation is clearly not transient. A great productivity boom may not yet be upon us, but as James Manyika and Michael Spence note in Foreign Affairs, the pandemic has certainly “spurred” businesses to “radically rethink... operations” – accelerating plans for organisational innovation and adopting the digital behaviours that kept them going. Think telemedicine, the high street turning to e-commerce and self-service checkouts, and the drive for robotics in meat-packing plants: two-thirds of senior executives in the US say they have increased investment in artificial intelligence and automation since the pandemic began. There is an excellent chance we’ll soon see this in productivity (then profit) numbers.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.