So here we are just a few weeks before Christmas and those twin imposters triumph and disaster lurk behind every corner.
England lose a brilliant World Cup bid that they could never win, only for the cricket team to comprehensively outplay Australia and take control in the Ashes. On Coronation Street four actors will lose their jobs as their characters are killed in a huge tram crash but it will drive the ratings and help celebrate 50 years of Britain’s oldest soap. Last but not least, George Osborne does jigs of delight after the OBR statement and manufacturing data vindicates his polices only for .....? Well exactly, only for what?
WILL AUSTERITY BITE TOO HARD?
When spending restraint digs in next year, will it combine with an even weaker housing market to send consumers and the economy over the edge? Or will the private sector and manufacturing and industry continue to create jobs and keep us going, albeit at a reduced pace?
It’s an issue on which the Bank of England’s monetary policy committee, which meets this week, is hopelessly split and is likely to remain so for a while.
The fact is that no one really knows. We can make educated guesses but, a bit like the World Cup, the analysis could be fatally flawed if we’ve made the wrong assumptions.
The England bid team assumed that when a FIFA Executive committee member shakes hands and says they’ll give their support, they mean it.
Mervyn King assumes large amounts of spare capacity in the economy and the government’s austerity drive will help weaken growth and keep down cost push inflation.
TURKEYS KNOW TO KEEP HEAD IN
Now turkeys know not to stick their necks out too far at this time of year, but, at the risk of being stuffed, here’s my sixpence worth.
We spent 2009 worrying about 2010 and 2010 worrying about 2011. In that time the UK consumer has been written off more times than bad debt.
Now I admit spare household income should be less next year as wages rise less than inflation and the costs of living – in terms of energy, food and clothing – go up, but I believe global growth will still be fairly buoyant and Britain as an open economy will benefit.
MUDDLING ALONG OK FOR INVESTORS
Therefore I predict we will muddle through, with the risks on the upside as we find out the effects of austerity are not as bad as feared.
And that could be just perfect for investors, with weak enough growth to keep bond yields and interest rates anchored and just enough growth to keep profits at cost efficient businesses chugging along.
In fact, stock markets could be well supported by cash rich companies. They will either increase merger activity, pay higher dividends or increase share buybacks.
FURTHER PREDICTIONS FOR 2011
Oh, and as for my other big assumptions: Europe’s politicians will do whatever it takes to minimise the euro crisis, China will find the right policy mix to keep its economy going at the right pace and the US will deliver growth that’s good enough for company profit but not enough for big job creation.
As I say, it’s only a forecast and if it’s a disaster I’ll meet it with the triumph of reclaiming my sixpence back from the Christmas Pudding.
Ross Westgate co-hosts Worldwide Exchange daily on CNBC and also anchors Strictly Money -- www.cnbc.com