Internationally, the buzz words for 2013 could be 'debt forgiveness'. Not debt forgiveness for Third World countries, but for weak Eurozone members. More business and personal corruption will be discovered in 2013 with China, Russia, Malaysia and Mexico, which all send huge amounts of cash out of the country, coming under the microscope as well as the 'big' banks. In the UK, the digital age will march forward with increasingly powerful do-everything tablet computers or oversized phones which also double as lap-tops being used for everything from booking a takeaway to buying a house, not to mention telling friends close, and not so close, how well things are going for you. Wage rises will be tiny, food costs will rise a bit and stay higher all year, while energy prices could fall as supply is growing faster than demand. With the Coalition Government making minimal progress on reducing Government debt, there could be big cuts in benefit payments. Even free bus passes for those over-retirement age and winter fuel allowances could be scrapped, Iinter-business collaboration rather than competition could grow to help control costs, but, and this is the hard part, it has to be profitable for both parties to be successful in the long term.
Too many ships?
As the world economy has stagnated, a large number (c300) of giant container-ships have been mothballed, waiting for better times. The price per tonne for moving shipping containers around the world has fallen to uneconomic levels. Bulk cargoes are faring little better. Some German banks are especially exposed to this, having made loans for ship purchases. Many of those older ships now have a value just above scrap level. The canny Greeks are buying some of these bargains and hoping the world economy will pick up soon. Germany's exposure to these loans going wrong looks to be potentially much bigger than their exposure to Greek bonds! 2013 could bring a new angst for German taxpayers with more stress on parts of the German banking system. What would be different is that it would be self-inflicted this time.
The continuing unresolved Greek debt saga could expose it interest rates back into double figures. The risk of political extremism getting a hold in Greece could see Europe panic, writing down 75% of its already reduced Greek debt in an act of 'debt forgiveness' paid for by European Governments holding Greek bonds, including the Germans. But, if Greece can have such generous treatment why not Ireland, Portugal, Spain and even Italy? The cost would be unsustainable.
American problems
Europe is not alone in having debt problems, the US owes a lot and, like Britain, is being warned of loss of AAA rating. Such a loss might mean less money flows in from the rest of the world. The US is relatively resource rich and, as with gas and oil, could surprise the world by continuing to grow. Major political deadlock over how to cut spending and increase taxes threatens to push the United States back towards recession. Slow growth or decline in the US will impact severely on the rest of the world, including Britain.
Raw material prices, including oil and gas, could be effected by the slow economy leading to falling demand. On the supply side, US gas, thanks to fracking, has halved prices. US oil output is forecast to reach its highest level for a long time, an oil price crash is unlikely, as long as Saudi Arabia is willing to sacrifice its own production by balancing the market with significantly lower sales. Even allowing for the Saudi's 'market rigging', there should be downward pressure on prices.
The current severe political instability in the Near and Middle East make behaviour predictions uncertain. Such instability could be worsened by increasing cereal prices, although they are unlikely to be as big, in percentage terms, as in previous years.
UK loans
In the UK, we face the problem of dealing with the country's debts. Pay-as-you-go or unfunded Government pension liabilities (state pension and public services pensions including the Post Office) are probably about three times national income, while funded debt, including state borrowings, personal sector and corporate debt is around five times national income. The sums are huge. They will be a burden for generations to come. Their absolute size does not help stability.
The Government may, in the face of negligible progress in reducing its own debt, feel forced to make big reductions in welfare payments of various types. State pensions are unlikely to be hit, but can the same be said for bus passes and winter fuel allowances? These benefits are available to the millionaire pensioner, as well as the poorest. Then there is the free TV licence for the over-75s. Because of the large number of people involved, the cost of these universal benefits is substantial.
What impact removing pensioners' free passes would have on the bus network is difficult to forecast.
B&NES cuts
Locally, B&NES is predicted to be on the receiving end of a cut in cash from the Coalition Government of around 2.5% in 2013–14. With the Lib-Dem Councillors who run B&NES already committed to a Council Tax freeze, cuts or further economies will be required.
As the Council's plan to slash public conveniences shows, tourism is not considered as important as previously. Perhaps funding here should be cut in half. The effect on residents would be nil.
The Council should be asking itself if, in this electronic age, with a weekly electronic bulletin already available, it really needs to produce its glossy promotional brochure distributed to every home several times a year. A single quality paper report to citizens, sent out with their rate demand, should suffice. It would simply be a beef-up of the report which currently accompanies the Council Tax bill.
Is weekly refuse collection such a sacred cow? Going to a fortnightly collection may assist recycling, which would be a double win. B&NES will argue there are some flats where it couldn't happen because of limited storage, but that really is the resident's or landlord's problem. Neighbouring Mendip Council works quite well with a fortnightly collection.
The Council itself with 65 Councillors is far too big. The number of Councillors could easily be halved. That would save a huge amount.
Other savings could include scrapping the Councillors' own discretionary grant kitty and a reduction in basic allowances for all non-cabinet Councillors of £1,500 p.a. to reflect the few meetings some Councillors attend.
A seperate Parish Council for Bath, which could fund all the cultural events currently funded by B&NES in the city, would allow Bath's citizens a direct say in what festivals they actually want. It could also take responsibility for a number of city centre activities provided solely in Bath, as well as becoming the Trustee of the Bath Recreation Ground. To help fund it, it should be given the Guildhall as its headquarters and permission to develop to give it an income stream independent of the precept.
B&NES could then find itself a more neutral headquarters, in a modern, purpose-built office, perhaps at Peasedown St John.
Then there is that huge portfolio of properties that B&NES owns in Bath. The whole commercial estate should be sold off and the proceeds used to reduce the huge deficit on B&NES' employees pension fund.
Owning all these properties in one small provincial city is clearly an imprudent way to invest in property. Using the proceeds to pay down pension fund debts may reduce annual special contributions to the fund significantly. It would certainly reduce risk. Clearly, the significant rental income would be lost, but then the Council's Estates Department could be closed down with further savings.
Councils can combine to save costs, but, being Councils, they don't think clearly, do not recognise that the other party has a different, risk-minimising, profit-driven agenda and generally end up paying more by failing to understand the implications of the small print in the agreements they eventually sign. So, best for B&NES not to lead the way in privatising services.
A new electronic age
For most of us, individually, the unstoppable march of the electronic age will bring new surprises.
New forms of entertainment and news distribution will arrive. Increasingly, papers are bought for their comment, rather than their news, except at the truly local level, where the weekly local paper provides a unique local focus.
Trusted citizen journalists catching local events for the media, including for The Journal, will be an increasing part of the media's newsgathering.
Economically, national unemployment will probably remain high, but stable, with a very significant amount of concealed unemployment where many people in part-time work want to work full-time.
With costly mortgages, it is not just the unemployed who need today's version of the 1930's soup kitchen, the Foodbank. Who would have predicted in the middle of the last decade, in Blair's Britain, home of the welfare state, where boom and bust had been banished by super-prudent Chancellor Brown, that Foodbanks would be a national movement in the UK under a caring, Conservative-Lib-Dem coalition?
What might we see in ten years time, after we have endured another ten years of stagnation? One thing we can be certain of, no local or national politician has the answer to house prices which are too high, land prices which are also too high and planning permissions for housebuilding which are too hard and too expensive to obtain, thanks to costly section 106 agreements and the need for new house-buyers to subsidise social housing within the cost of their own housing.