By admin On Thursday, January 22 nd, 2015 · no Comments · In

To put this blog into context, dear Reader, you should understand that I am writing it the day after the unspeakable murders at the offices of Charlie Hebdo in Paris and while listening to Melvyn Bragg’s excellent radio programmes explaining Magna Carta and its historical significance for the development of our modern government.

The contrast is instructive.

On the one hand we sit in the luckiest country on earth which has spread across the world a well-established system of representative government guaranteeing its citizens rights under the law, which include freedom of worship and freedom of speech, and with a great tradition of exercising those freedoms to entertain us and hold the powerful and over-mighty to account.

On the other we are faced with a humourless, nihilistic philosophy of death, which encourages its adherents to kill people who express any views different to theirs, unless they recant and join them.

The contrast is as stark as if the black flag of ISIL were set alongside the bright white and red flag of St George.

This was a different deal to 9/11 and 7/7. It wasn’t amateur in anyway; it was planned and the perpetrators got away. It was slick and involved well trained fighters. We may look back at 7 January 2015, and think of it as the day that war was declared on the West, our freedoms and way of life.

Prediction No.1.

The fight against Islamic terrorism will be a top priority. The Government will take more powers to intercept emails and phone calls and ISP’s will be required to co-operate. There will be a curtailment of our freedoms. Our challenge will be to control and limit those actions.

Prediction No.2

Moving from Paris to the EU, and more specifically the Eurozone, something has to give. The rot at the heart of the project will finally spread to its head. The economic disaster in Greece (and the rest of Southern Europe) will come together with Cameron’s move to reform the EU and gathering public unease about the lack of competence, accountability, value for money and integrity at the heart of the European project.

In 2015 I think that the tectonic plates will start to move. The only question is when the earthquake will happen. 2016 would, I think, be a good guess. It could all come good for Cameron’s proposed referendum (assuming Prediction 4).

Prediction No.3

Meanwhile the EU will stumble on. There will be QE as Draghi tries to head off deflation despite German objections. The Euro will fall against the dollar and probably against the pound, and The Eurozone’s continued impoverishment will dent the recovery in the UK, while we will run an ever increasing balance of payments deficit with them.

Prediction No.4

There will be a general election in the UK, and the electorate won’t want Miliband in power, despite the polls. He will be scuppered by his unfortunate looks, inability to eat a sandwich, (with some people the fact that it was a bacon sandwich will count), and more importantly his party’s economic record and a paucity of sensible policy initiatives.

In England being associated with the spectre of a Lab-SNP coalition will be profoundly off-putting.

I go for a small Tory overall majority. I think that UKIP’s appeal will falter when its supporters clock that they’re not a very nice bunch, by and large, and that they (the voters) can get what they want from a respectable mainstream party that has policies on other things than Europe and immigration, and a record of competence in government.

Prediction No.5

The UK will increasingly find itself in a good place, both politically and economically, at least relative to others, and in the light of chaos elsewhere will again be seen as a safe haven. Our economic recovery will continue although we will be constrained by the economic under-achievement of our closest neighbours. But with a strengthening dollar the USA will become an even more important export market than it is already. With common political histories (fragments of Magna Carta are incorporated in 17 states’ constitutions) our relations with the USA will become closer in the light of the Islamo-fascist threat, maybe buoyed by an EU/NAFTA trade deal.

Prediction No.6

Interest rates will remain unchanged throughout 2015. A brave prediction, I know, but look at the facts. It would suit our interests to let the pound weaken which will boost exports and by being inflationary, mitigate any exported deflationary pressure from the Eurozone. It will keep more households happy than unhappy, and sustain the housing market which is important both as a store of wealth and because we need more housing.

Prediction No.7

Oil will remain cheap throughout 2015. This is good news for UK consumers, and manufacturing industry, particularly the plastics and chemical industries that rely on hydrocarbon feed-stocks. It is bad news for wind farm enthusiasts, Scottish nationalists, the Russians, large swathes of the middle-east and parts of South America. Low prices will dissuade oil companies from fracking in the UK and a lot of other investment in oil exploration, particularly in hostile environments like the South Atlantic will be put on hold.

The low oil price will increase disposable income and generally help with growth in the UK. It may be seen as one of the most important contributors to a Tory victory in May 2017.

Prediction No.8

Because of Prediction no 7, Mr Putin’s hold on Russian power will begin to weaken. This could be dangerous. Further adventures in the Ukraine and the Baltic should not be ruled out. It could also be dangerous because the West will need Russia to drive global agreement on what to do about ISIL in Syria and Iraq, and Putin may use this as a bargaining chip to obtain a covert blessing for his expansionism.

Prediction No.9

Although all insolvency practitioners are “optimists on the down-side”, I think that insolvency will remain low again in 2015. There will be pockets of difficulty as companies fail to change with their markets- oil exploration and retail are a couple of sectors which could suffer.

The new Statement of Insolvency Practice (SIP) 16 governing the conduct and reporting of pre-pack sales in administrations will be adopted and pre-packs will become less common at the lower end of the market, but will come back as IP’s get the hang of them. I do not think that many public spirited business people will offer a low cost opinion on the price paid or viability of the businesses sold, so in that respect the new SIP not be implemented.

FPN with both insolvency and corporate finance credentials will prosper by offering independent advice and assistance on the valuation, marketing and sale of troubled businesses.

Prediction No.10

Mergers and Acquisitions at all levels will boom. At FPN we are already seeing a lot of activity and we have a very good pipeline of company and business sales, acquisitions and MBO’s that should come to fruition in the first half of 2015. We would expect a lull around the election, because of the uncertainty, but if I am right with my other predictions I think this market will remain robust for the whole year.

Disclaimer and Invitation to Disagree

These things may or may not happen. Please do not invest anything on the back of my predictions. They reflect my, Antony Fanshawe’s, own opinions and not those of FPN’s. They are based on my prejudices, experiences and understanding. I do not have a crystal ball and cannot see into the future so I take no responsibility if they are wrong.

You are free to disagree with me in public in any way you choose- you wouldn’t get that offer from ISIL, but you may also choose to buy me a drink if I am more than 50% right, or shrug and walk away if I am not. I will re-visit my predictions at the end of the year.

Whatever happens in 2015, I wish you a Happy New Year. I hope that it is a good one for you.

Antony Fanshawe

8th January 2015.

Photo credit:Convergence Partners