Nov 2008 Scenario

The current financial incentives proposed by the government fail to work as hoped.

The VAT reduction is totally ineffective and the part-nationalisation funding arrangements fail to support the banks adequately as they require yet more financial support to stay solvent. Full nationalisation of yet more banks is likely. This is caused by massive write-offs due to commercial loan defaults, the unwinding of complex banking arrangements and fraud.

Supposed capital investment initiatives struggle to get off the ground and fail to generate long term sustainable jobs.

Tax revenues collapse and as a consequence public sector borrowing soars leading to continued pressure on the pound – parity with the euro likely although the dollar will hold at $1.25 due to its own decline.  (The IMF could be forced to intervene as per 1976!)

Great chance of a split euro zone between North and South leading to two types of euro.

Oil prices will stabilise @$75 per barrel but inflation will be 2 to 3 % due to the pounds collapse.

The recession is severe leading to nearly 4M unemployed at its peak before recovery starts in 2011.

A private sector backlash against Public Sector conditions of employment gains momentum but lack of appropriate reforms whilst Labour is in power due to their financial support by the Unions.

Public Sector effectiveness will decline due to “Death by 1000 cuts” mentality produced by Government so-called efficiency savings – ‘Slash & Burn’ massive re-engineering is needed to introduce private sector productivity. Industrial disputes similar to the 70’s & 80’s will begin but from middle classes this time.

Nation states will adopt more protectionist measures, particularly in the
USA.

The BRIC economies will see social unrest and increased political/religious terrorism.

As a result globalisation will reverse as organisations look to implement shorter, local, more stable and environmentally friendly supply chains.

This will mean organisations “in-sourcing” more, requiring re-learning lost skills and re-investing or sub-contracting to local, possibly start-up organisations that can compete.

Organisations that succeed will be niche organisations that are special and offer good customer service with a perceived identity.  Only they will prosper – no more ‘me2 – copy other’ type organisations – customers will demand value and service, not just price in the future.

The middle classes will challenge restrictive legislation particularly over stealth taxes, political correctness, health and safety and employment conditions.  Employers will press too for relaxation in employment conditions and remove restrictive legislation – too much red tape! At its extreme a move to leave EU grows

A growing breed of “independent enterprise” worker emerges wanting flexible employment terms with few benefits but more importantly restrictions.  This will need inspired changes to current IR35 legislation.

Environmental issues will remain prominent as people become increasingly aware of “waste/excess”.  There will be a move away from re-cycling to prevention in the first place – less packaging and transportation for example. The old adage: reject, reuse, repair, reuse, recycle has real meaning.

Environmental, energy costs/uncertainty and the economic necessity of manufacturing will make ‘technology’ attractive once more and seen as a solution to problems rather than the cause.  However, critical skill shortages, finance and capability limit the
UK’s ability to react and benefit. New scientists, engineers and skills which need ability are required hence back to basics with harder exams etc.

‘Clean’ energy schemes could be the key driver to recovery through investment in new nuclear and clean-coal power stations.

A distinctive lack of creative ability and decision making skills in society and managers inhibits growth.  People have been told what to do for too long, particularly in the Public Sector by Central Government.

Increasing polarisation between savers and spenders forces a rethink of values and economic principles.

Victorian values of thrift, enterprise, self-support, technology and innovation begin to return – economic growth comes from ‘entrepreneurs’, in many cases forced upon individuals as traditional employment disappears.

Creativity / Enterprise / Dunkirk spirit become emergent themes for
UK society.

Demand for moral values, moral leaders and role models rise and increased growth in church attendance/spirituality/cults is seen.

Social responsibility by the media is demanded – the BBC could lead on this and find a new purpose and role for the 21st century?  The founding principles might be re-interpreted as ‘inform, educate then entertain’.

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