Oh, it’s a high bar (sadly, not relatively high enough, Harry), so I’m under some pressure. The year just drawing to a close was a good one for the crystal ball: the end of Boris Johnson, the triumph (however transitory) of Liz Truss, and the scourge of inflation.
So what of 2023? Here are this year’s predictions, as I again ignore Paul Gascoigne’s famous quote: ‘I never make predictions, and I never will.’
Let’s return to the political arena to kick us off.
We won’t have a new PM by this time next year.
Last year the crystal ball had it spot on. Boris Johnson is to go and Foreign Secretary Liz Truss may be the one sitting on a chair when the music stops.
I’ll concede that I may not have polished it quite hard enough – the fact that Liz didn’t have time to measure for new curtains was lost in the mist – but as predictions go, it wasn't bad.
I’m equally confident with this year’s look into the political future, as 2022 brought us three PMs and four Chancellors. Next year, it’ll be one of each – the same ones we have now. Come December 2023, Rishi Sunak and Jeremy Hunt will still be next-door neighbours.
And a bonus prediction for the corridors of power, albeit one for our colleagues across the pond. Whether it is legal, financial or something as predictable as age (he’ll be 77 by this time next year), I don’t think Donald Trump will any longer be seen as a realistic candidate for President in 2024. The smart money – and the billionaire backers – will be lined up behind Florida Governor Ron DeSantis.
Energy will be the scourge of 2023
Last year one of the predictions was that ‘inflation will be the scourge of 2022.’ It’s interesting – and slightly depressing – to look back.
"One of the headlines has US inflation rising to 6.8%, the highest for 40 years. German inflation hit 5.2% in November, and the Bundesbank is openly speculating about reaching 6%. The Bank of England’s new chief economist here in the UK says inflation could hit 5% by ‘early next year."
As we all know, those figures proved to be hopelessly optimistic. Inflation in the UK reached double figures, and while the expectations are for it to come down in 2023, hopefully to around 6% by the end of the year, – I suspect ‘slowly’ might be in there somewhere.
One of the key drivers of inflation has, of course, been energy prices. On 24th February, we’ll mark the grim anniversary of Russia invading Ukraine, and there’s no sign of that conflict ending. Hence energy prices will stay high – and that will impact a great many UK households – we pay the highest electricity bills in the world apparently – and businesses.
Michelle Knight, the landlady of the Six Bells in Bridgend, has taken to pinning her energy bills to the wall to explain to regulars why she’s had to cut down on the number of beers available. She won’t be the only one.
I ended last year’s section on inflation by saying that ‘tight control of the cash flow will be essential in the next 12 months.’ With a lot more pain to come in the wholesale energy markets, that will be every bit as true in 2023.
The ‘work from home’ debate will turn ugly.
Last year I predicted that ‘the work/life balance will continue to tilt towards ‘life.” That was a reasonably accurate prediction for the first half of the year. But over recent months, we’ve seen more and more companies demanding a return to the office.
In June, Tesla boss Elon Musk said that everyone would now be required to work 40 hours weekly in the office. "Otherwise," he declared, "You can pretend to be working elsewhere." Having completed his $44bn acquisition of Twitter – which by this time next year will either be genius or madness – he has reportedly installed beds at the San Francisco HQ, telling staff they’ll need to be "extremely hardcore" to succeed.
Is this the route we should all be taking? I don’t think so! Beds will NOT appear in Marshall’s Mill.
I’ve said it a thousand times, but success is not measured by time spent in the office but by results. And results do not come from the members of your team being ground down by the daily commute. The inevitable pressures of the last full week before Christmas means I’m writing this section very early on a cold Monday morning. But I’m at home: the best start to my day cannot be standing on a frozen platform waiting for an equally frozen train which may or may not turn up.
Everyone reading this blog is in the results business, not the ‘time spent’ business. Let big businesses do what they will while we continue doing what we do best – building our businesses and taking care of the people with us on the journey.
Moves Towards Digital Currencies will Accelerate.
"There will be a major cyber-attack in 2022," I predicted last year. There most likely was, but it was not reported by the company in question. In 2023, cyber-security will be vital for all of us, but let me make a slightly different technological prediction.
Moves towards digital currencies, backed by the relevant central banks, will accelerate sharply.
China is steadily pressing ahead with its plans for a digital yuan, and in November, the Reserve Bank of India rolled out the second phase of testing a digital rupee. After successfully running a pilot programme at the wholesale level, it will now test the digital currency in a retail setting.
The UK? Last month City AM reported that the Bank of England is "actively consulting" on a digital pound.
Digital currencies have apparent privacy implications and drawbacks for certain community sections, but I think they’re inevitable.
And they’re attractive to the central government. Depending on which paper you read, Jeremy Hunt’s Autumn Statement was an attempt to "fix a hole" between £50bn and £60bn. You may or may not approve, but it’s a simple fact that a digital currency that stops cash payments would go a very long way to filling that hole.
By this time next year, it could well be ‘when’ not ‘if’ as far as the digital pound is concerned.
The UK will confound expectations.
As mentioned above, we’re now on our fourth Chancellor of the year. Kwasi Kwarteng’s ‘fiscal event’ in September represented an unashamed bid for growth. “Our entire focus is on making the UK more competitive in a fiercely competitive global economy,” he said.
Less than two months later, Jeremy Hunt turned that on its head, with ‘stability’ as one of the key themes of his Autumn Statement. As regular readers know, I like stability: businesses need certainty. But plenty of commentators and organisations were critical of the Autumn Statement, highlighting the freezing of tax allowances and – for business – the end of the super deduction next April.
The CBI is worried, drawing parallels with the under-performance of the UK economy in the wake of the 2008 economic crisis and warning against another ‘decade of lost growth.’
The EY Item Club is cheerfully forecasting ‘a prolonged recession’, and the OECD predicts that the UK will have the lowest growth of all the G7 countries next year at minus 0.4% (with Germany at -0.3%).
You know what? The UK will confound people in 2023. How much hard evidence do I have for this? None at all. How much ‘gut feeling’ do I have? A lot.
Last year I predicted that ‘TAB members will continue to be optimistic.’
"They will continue to be the most optimistic, forward-thinking, positive people to work in the UK. [Their] humour, positive outlook and sheer bloody-minded determination to continue building [their] businesses come what may have been an inspiration."
Every single word of that paragraph was born out in 2022. Every single word still holds good as we enter another year. Your optimism, energy and commitment continue to inspire me and – if TAB members represent SMEs up and down the UK – the country will confound expectations.
It remains an absolute privilege to work with you all and to see the progress you make every day, every week and every month.
Thank you for reading my ramblings this year: have a wonderful Christmas, and may the New Year bring you and your family everything you wished for.
The blog will return on Friday, 13th January – but let me close 2022 with one of their most famous, oft-repeated predictions. Not from Gazza this time, but Napoleon:
"Newcastle United sleeps, but the world will tremble when it wakes."
I can’t wait…
