The 2017 HAMISH_MCTAVISH Predictions Thread

HAMISH_MCTAVISH

The big global issues for the next few years will certainly include Brexit and Trump on an alarmingly regular basis - but this year may be too soon for either - It will take Trump some time to do any real damage and the worst excesses of Brexit may yet be avoided if May can negotiate a good deal around single market access.

So with the caveat that 2017 is likely to be less predictable than most years we'll give it a go anyway.

As for the predictions...

1. House prices will rise. Indices will range from +1 to +5%. This is a slower rate of growth than last year.

2. FTB numbers will fall due to Brexit induced job market uncertainty and disposable income being squeezed by inflation.

3. Inflation will rise significantly because of the Brexitary GBP devaluation - I expect a range between 1.5% and 3% for most of the year.

4. The big falls in unemployment we've seen recently will slow and may even start to reverse - likewise the picture for real terms wage growth is much gloomier thanks to increasing inflation. Best guess is a slight rise in unemployment and falls in real terms wages.

5. Interest rates will end the year at or below 1%.

6. House building will not increase at anywhere near the rates the government has promised or the country needs to alleviate the housing crisis. If the government does not reverse the punitive BTL taxes that act as a discouragement to investment it will fall.

7. Rents will continue to increase and reach another new record high.

8. The gap between London/SE and the rest of the UK will continue to close as it did in 2016.

9. Aberdeen house prices will continue to soften a bit as they have done over the last year. The falls in Aberdeen rents are already starting to ease and should level off towards year end.

10. Economic growth will slow with GDP under 2.0% for the year

Politics:

11. If the government indicate a soft/sensible Brexit (staying in single market) and/or long term transitional deal is being targeted then the worst economic consequences of Brexit to the UK will largely be avoided. And a second Scottish Indyref will be off the table.

12. If the government indicate a hard/chaotic Brexit is being pursued then the SNP will call for Scottish Indyref 2 - and win it.

13. The UK Labour party will end the year with a different leader. (perhaps a bit of an outlier but we can live in hope!)

14. DAESH will continue trying to destabilise the West with additional terrorist attacks and attempting to start the race/religion war they so desperately want - aided and abetted by the European/UK right-wing groups that are the other side of the same coin..... Hopefully they will fail.... and decency, reason and humanity will win out over despair, hatred and division... But 2016 has taught us that cannot be guaranteed.

15. And finally the European elections - Peak Populism will pass soon enough - hopefully it's this year and we can avoid any more pointless disruption from extremists like Le Pen getting elected - but lets not count our chickens just yet..... :beer:

Masomnia

I reckon the coming year will be about as unpredictable as you're going to get so fair play for having a go!

Agree with most of it, except I don't think there will be significant falls in FTB numbers, I don't think wage levels are particularly a barrier. Nor in house building, as far as I can tell there's no evidence of that slowing down and little reason to think it will with rising prices, access to finance no worse, immigration, and a strong employment market.

Unemployment was never going to fall significantly from here anyway; it wasn't much below 4.8% if at all pre-GFC. So not much change there.

Agree re HPI, interest rates, rents.

GDP growth under 2% might be a little pessimistic, but we shall see.

Filo25

Masomnia wrote: »

I reckon the coming year will be about as unpredictable as you're going to get so fair play for having a go!

Agree with most of it, except I don't think there will be significant falls in FTB numbers, I don't think wage levels are particularly a barrier. Nor in house building, as far as I can tell there's no evidence of that slowing down and little reason to think it will with rising prices, access to finance no worse, immigration, and a strong employment market.

Unemployment was never going to fall significantly from here anyway; it wasn't much below 4.8% if at all pre-GFC. So not much change there.

Agree re HPI, interest rates, rents.

GDP growth under 2% might be a little pessimistic, but we shall see.

I couldn't agree more on the level of uncertainty coming into 2017, the political uncertainty alone is enormous (primarily Brexit and Trump for us)

Slowing real wage growth due to higher inflation is likely to be a bit of a drag on growth though, if Trump delivers on his promised massive infrastructure stimulus that could have significant impacts on the US and global economy, both in terms of growth but also inflationary pressures.

I would probably say growth of around 1.5% over the course of the year but the uncertainty around that is huge.

With regards to housing In the south east I don't see much likely to drive a change from the current situation with very low transaction numbers., superprime likely to continue to be under pressure

I doubt we will see any further significant falls in mortgage rates, that long decline may now be over.

With regards to politics, there will no doubt be further attempted attacks by Daesh in France and Germany in particular, as they attempt to influence the upcoming elections there.

No doubt Putin will continue to try to influence the elections in Western Democracies in the light of his success in the Presidential election.

For the Labour party I think the hard left will retain control throughout 2017, even if Corbyn did stand down I don't see how they would move politically with the current membership they have.

That said I doubt the polls will look much better for Labour over the course of the year, they seem to be treading an impressive course of annoying both Leave and Remain voters at present, the LibDems on the other hand should see a modest recovery in their fortunes, with their stand on Brexit they are at least making themselves relevant to some voters again, and from their low base its hardly a strategy which is full of risk for them.

Its unlikely that we will have a general election in 2017, even if the Tories do bleed a few more seats they can probably keep the DUP on board relatively cheaply to bolster their majority, and May would obviously prefer to fight the next election under the new boundaries rather than the current ones. The only way I can see an early election is if we see strong Tory rebellions on core issues.

Conrad

Hamish, point 15 on populism is well off beam, here's why. The populist tide is fuelled by two things, culture change being resisted and the downside of globalisation where for example 50% of Americans now earn less than in 1999

But there's an even bigger factor as to why populism has not peaked by far; it works. Trump will return jobs to the US as I've been saying for months, he will cut better deals by being bilateral, not multilateral, and Brexit will see us prosper very well.

I can't see the French socialists finding enough enthusiasm for Fillons Thatcher policies, no, and LePenn, like Trump is the all important real change candidate.

Populism, or as I would say, democracy at work, is here to stay


Growth I'd expect above 2% for sure.

House prices, rising but the buy to let mortgage market appears to be faultering due to tightened criteria to allow for impending income tax rises

vivatifosi

On BBC Business Breakfast this morning they were in China and had an economist and a fortune teller "forecasting" what would happen in 2017. They made very similar predictions. And if it all goes **** up, then we can apparently blame the fact that it will be the year of the Rooster. Years of the Rooster can be quite disruptive apparently.

So I sat down tonight to read the tea leaves (well, I'm as likely to get this wrong whether or not I invoke the laws of economics), and here are my thoughts. Don't hang on my words too much though. I gave myself a D- for last year's efforts.

1. Agree that house prices will rise and modestly. However I think that the rises will be geographically patchy and not even - to a greater extent than previously.

2. In keeping with the above, people will start to wonder if 2017 will see the top of the housing market, and dispose of some BTL properties, particularly given the new rules. The impact will fall on those who are trying to rent but find their pool of properties shrinking.

3. I agree that there will be inflationary pressures during the year. However I don't think that this will be evenly spread and will depend on the item. CPI I'm guessing 2.5%. There will be pressure on public sector workers to take a 1% increase in wages, causing dissent.

4. Employment/unemployment: I don't think we are going to see an increase in unemployment straight away, however I don't think that the numbers in employment will grow, with good news being offset by the start of job losses which will increase into 2018.

5. Agree that interest rates will end the year below 1%. Probably .5% or lower.

6. Housebuilding: agree with what H says, though it will be interesting longer term to see what happens to the garden villages/towns/cities.

7. Rents: agreed. Supply will reduce, demand will stay the same. Neo-classical tea leaves at their finest.

8. Economic growth c1.8% for the year.

9. Can kicking: Greece will still be in the Eurozone and the Italian banks will be creaking but not failing.

Political:

1. We'll enter a Brexit transition phase rather than hard Brexit from the outset.

2. Even if there isn't a far right government somewhere in Europe by the end of the year, the growth of the far right will not go away. Merkel won't win.

3. Trump will surprise everyone. Not sure what with... take your pick - he'll be supremely popular at home with jobs coming back... he'll announce war on N Korea... he'll make a buddy movie with Putin... he'll announce a contract for the wall. The only thing that I am sure of is that I'll hear about it from the POTUS twitter account.

4. Crisis in the NHS and care sectors as recruitment and retention problems bite.

5. Daesh will be corralled into two cities: Raqqa and Mosul. As they hit back there will be terror attacks on a greater scale than in 2016. I really hope this is one I am wrong about.

6. Turkey will be pivotal in whatever happens this year. It is the country with the most at stake: internal conflict (only 6 or so months on from the coup), need to battle ISIS, secular vs islamic, war with the PKK, refugee crisis, migrant crisis, cities vs countryside. It's instability central.

7. Increased tensions in the South China Sea.

Conrad

A wild card, but I could see the full Brexit trade deal being wrapped up in 2017!!

HAMISH_MCTAVISH

Conrad wrote: »

Trump will return jobs to the US

Trump's policies will be great for the rich elites - his proposed inheritance tax cuts will benefit the members of his cabinet $9 BILLION alone - but thats a very long way from being good for ordinary voters.

If you bribe businesses by cutting their taxes, scrapping environmental legislation costs, reducing labour protections and workers rights, etc, you can obviously get them to bring some business or jobs back from overseas - but the costs of doing so may well outweigh the benefits to society as a whole.

The US stock market is on a sugar rush high at the moment - it looks like Trump policies will be great for corporations, bankers and hedge funds - but very bad for workers, the poor and those needing healthcare.

In other words - he's about to let down the very people who voted for him.

That won't end well.

But it might give him enough bragging material to keep himself popular for a while....

BobQ

I think Trump will continue his conversion to believe in things he never thought possible. He seems to be coming around to global warming not being a Chinese conspiracy to undermine US industry for example. Perhaps by year end the Greens will be accusing him of being part of the Washington establishment!

Some of the factors that Hamish predicts suggest that personal debt may increase and their may be more defaults occasioned by the cumulative effects on low real term wage growth over another year. If anything mortgage rates will rise I think, we are certainly seeing less available fixed rate loans.

padington

Average house prices more than 5%.

Wood Green 7%.

Jonbvn

padington wrote: »

Wood Green 7%.

I'm totally shocked that Hamish didn't have this as the first item on both his financial & geopolitical lists in flashing neon. I know it is the first thing that enters my head when I wake up in the morning.

Crashy_Time

Aberdeen to crash harder


Wood Green to start crashing


Crashy Time`s rent to stay roughly the same as it has been for years


Posters on here to start joining the HPC website...too late of course.........:rotfl: