Will this be a better year for the economy than 2019?
Dr Victoria Bateman, lecturer and fellow in Economics at Gonville and Caius College, Cambridge, says YES.
It’s the start of a new year, a time of hope and new beginnings, so I’m going to kick things off on an optimistic note
While there was a lot of disappointment in 2019, and many of those on the left or in the Remain camp have almost entirely given up hope for the next five or even 10 years due to the election result, I’m feeling a little more hopeful.
Though Boris Johnson has a tough reputation when it comes to Brexit, deep inside I think he understands the arguments for maintaining a close relationship with the EU, and now that he’s free of the hardline ERG group of Brexiteers in parliament, the doors may have opened to a softer, less economically damaging Brexit.
Furthermore, while investment into the UK stalled last year as a result of both fear of a no-deal Brexit and of Jeremy Corbyn becoming Prime Minister, if both can now dissipate, the runway is clear for economic take-off.
Sir Vince Cable, former leader of the Liberal Democrats and former secretary of state for business, innovation and skills, says NO.
The UK is only two per cent of the world economy, and we will soon be on our own. The business risks around Trump-driven protectionism and a breakdown in global rules are growing. Post-crisis worries about overhanging debt remain.
After the election, there will be a short-term boost to confidence as those misguided enough to have believed in the propaganda warning of a Jeremy Corbyn victory bring their capital back.
But Brexit uncertainty hit business investment last year, and it will continue. There will probably be a limited agreement covering the essentials to stop major disruption after the transition, but the big issues around services trade — including financial services, tariff arrangements for industrial supply chains, and regulatory detail — are years away. There will be more clarity on immigration rules, probably disappointing firms with recruitment issues.
Expect disappointment as inflated expectations about public spending and tax cuts collide with Treasury financial orthodoxy. The Treasury usually wins. The negatives clearly outweigh the positives.
Main image credit: Getty