For anyone who could be bothered to keep up with the newspaper headlines today; and who is inclined to easily believe the sort of positive spin that has become the norm in much of our mainstream media, then no doubt you will have been pleased and gratified to learn that within a couple of decades Britain will be on course to become Europe's largest economy; or that power and glory will be coming to Britain in 2030. After all, that'll be good news, right?
Only I'm no expert, but I'd be pretty sure that the likes of David Cameron, Iain Duncan Smith, George Osborne and all, would be extremely happy about any newspaper headlines essentially confirming what they've been telling us all along, that the pain will be worth it in the long run, that their austerity measures are working, that we're all in this together.
The report in question, issued by the Centre for Economic and Business Research, proudly boasts that by 2030; and assuming a growing population, relatively low taxes, as well as a continuing existence outside of a still failing Euro-zone, Britain could, or even might surpass Germany as the biggest and strongest economy in Europe. Furthermore, the report authors go on to suggest, that the UK might become the most successful western economy, behind the USA, by 2030; a prediction that will undoubtedly warm the cockles of every Conservative heart in the country, especially when one considers the food banks, homelessness and their treatment of the disabled that they've been forced to impose on the country, in response to the last Labour government's wastefulness. However, according to some members of the Coalition government, this report simply helps to underpin the need for their austerity measures and lends weight to their argument that the deficit is falling (although the National Debt isn't) and that new jobs are being created (most of which are part-time and low paid, leading to a significant increase in the amounts of Tax Credits being paid out)
Of course, there are certain economic provisos, stipulations and pre-requisites to be met before we start jeering at the fiscal misfortunes of our German neighbours, not least of which is the need for a weak Euro, an ageing population and the prospect of future Euro-zone bailouts within the region. Only if these specific criteria are met can we hope to outperform our German counterparts, essentially by wishing them every sort of socio-economic misery that you wouldn't wish on your own worst enemy. However, in the event that the Euro-zone was to collapse and Germany was to return to its former national currency, the Deutschmark, then in all probability the UK would not, could not surpass Germany as the strongest economy in Europe. Happily though, the report does forecast that the UK might outperform our French neighbours more easily, given that the current socialist incumbent is bound and determined to impose high tax and low export strategies during his term of office, although whether or not these will still be adversely affecting the French economy by 2030 is extremely questionable at best.
According to the report by the CEBR, Britain's forecasted success over the course of the next sixteen years doesn't just depend on the bad luck experienced by our European competitors, but also the UK taking affirmative steps to secure its own future prosperity. Economic clouds on the far distant horizons of 2030 that it highlights include, the threat to cut immigration; and Britain's increasingly fractious relationship with the European Union as a whole, presumably referring to Mr Cameron's much vaunted promise of an In/Out referendum in 2017, which seems to take little account of the current state of the public opinion polls in the UK; and the growing likelihood that Mr Cameron will be a one term Conservative Premier anyway. That fairly important issue aside however, the report also makes plain that any future success for the UK must be based on its ability to win new markets and new customers, as well as to improve its current balance of payments, which is heavily influenced by domestic consumer spending, rather than by international trade.
Interestingly though, almost as soon as this report was published by the mainstream media, various commentators began pulling holes in it, not least the fact that the economists at the Centre of Economic and Business Research are trying to forecast events some fifteen to twenty years in the future, when generally they struggle to predict two or three years in advance.
The fact that the report also relies on the purported benefits of mass immigration to support its own hypothesis has also come in for a fair degree of criticism, especially when one considers that Britain already has millions of its own indigenous people idle, through lack of work, yet the CEBR espouses the introduction of even more foreign workers to fill what few jobs are left. Presumably the basis for their argument is that these foreign migrants are generally fit and able, yet seems to take little account of the fact that such migrants are often transitory in their nature; and in most circumstances are likely to take money out of the British economy, rather than put it in. This was particularly true of the hundreds of thousands of Polish citizens who drifted in and out of the British economy, ostensibly to make their money, which was then returned to their native homelands; and thus creating little if any benefit to the British economy as a whole. Added to this is the sheer investment that existing British taxpayers have had to make in order to ensure that additional basic structures were in place before a single migrant arrived, or paid a penny in tax, with essential services like police, health, education, community services all having to be reinforced to cope with the additional numbers of people living in a particular area.
Perhaps one of the most noteworthy comments offered by critics of this particular report, was the fact that one of the CEBR's own economists had previously forecast that it might take until around 2020 before the UK could end its debt reduction programs; and that on the basis of its own calculations Britain could not maintain its AAA rating, about which it was partly right and partly wrong. Other commentators who doubt the efficacy of the report have also pointed out that it is what the CEBR doesn't say, which is more important than what it does. They point out that the UK's GDP (Gross Domestic Product) per capita has been slowly but steadily declining since 2007 due in no small part to the massive inward migration from Europe and elsewhere. This they suggest is why the CEBR report supports the idea of maintaining high immigration numbers, simply because high inward migration inevitably leads to higher GDP, but without the guarantee of higher national production. As things stand in the UK, making things, our manufacturing industries are estimated to account for around a miserable 10% of our country's total GDP, despite the fact that some seven million foreign born migrants have now settled in our country, perhaps illustrating the point that mass migration doesn't always lead to greater productivity in the manufacturing sectors.
Fundamentally though, this report, like many others will probably be as accurate as that other area of national forecasting, the British weather; and in all likelihood will offer no certainties about what the future holds. As with the weather, economic forecasting is dependant on so many variables, a few that can be controlled, but many that can't, that it would be virtually impossible to offer any cast iron guarantees about anything. Assuming the economic history of post World War II Germany to date, it seems highly unlikely that its politicians would allow their country to lose its hard won position as the foremost manufacturing centre in Western Europe. It also does not seem to make any sense that Britain with an ageing population would perform any better or any worse than Germany with an ageing population, when both countries happen to be the preferred destination for millions of young, economically active migrants from the former Eastern Europe states.
There's an old adage about how people wishing their lives away is an inherently bad thing to do; and it's probably safe to say that neither should we allow organisations like the Centre for Economic and Business Research to forecast our lives away either, as in all probability they'll be proved to be wrong. So for anyone who happened to get excited about the headlines proclaiming Britain as the economic strongman of Europe in around 2030, perhaps it might be worth waiting a few years before you start getting the bunting out.