Friday, 29 December 2006

New Year Predictions

The New Year is traditionally a time when the press reviews the year that has just ended and the year that is about to commence. There is a plethora of material in this vein. We normally point people to 'The World In ...' series by The Economist as a reasonably authoratitive source (see magazine link). The World in 2007 has a number of interesting articles - we particularly like Angela Merkel's vision of Europe. This year, we are also recommending a longer article in The Business as being of interest (see article link). In our view, this is a useful reminder that, in the markets, what goes up can also come down again.

The reviews of the year ahead always contain a number of predictions for the future. As futurists, we try to avoid making too many point estimates for the future. It is more interesting to provide a number of range estimates as to what the future might hold. This gives us more material to work with and recognises that the future is not pre-determined. This is one of the lessons that we try to instil into our Interns at an early stage. To underline it, we ask them to take an old copy of 'The World In ...' series and to update us on a number of predictions.

For example, in 'The World In 1997', we were told:
"British voters in 1997 will eject the Conservatives after 18 years and, without enthusiasm, elect a new government under Tony Blair. As a result, Britain will not find a new world role: it will finally cease looking for one. Mr Blair, born in 1953, will be Britain's first genuinely post-imperial prime minister."
At one level, this forecast was wrong - Tony Blair is the most interventionist prime minister since Anthony Eden, who has involved the UK in more overseas adventures than the previous five prime ministers put together. However, at another level, the forecast was right. The entanglement in Iraq is deeply unpopular in the UK and a vast number of Britons have simply lost the taste for an imperial adventure. To us, this is an example of getting a trend right but a point forecast wrong.

We always have to keep in mind this reservation when we read about what the future holds. None of us knows for certain what the future will be - the best we can do is to discuss the ranges in which it might be located.

Happy New Year!

Tuesday, 19 December 2006

Is the experiment irreversible?

Our current workload includes an examination of the future of the European Union (EU) as a political entity. In many ways, the EU is something of an experiment for Europe - an attempt to integrate the European nations peacefully and voluntarily instead of integrating Europe forcefully. Much of the discussion surrounds the degree to which Europe should be integrated (the Federalists with a tight economic and political Union, the Atlanticists with a close economic Union but a looser political Union, and the Nationalists with no Union at all).

However, underneath all of this high level debate are over 400 million people who are just getting on with their lives. They wake up, go to work, eat, sleep, and dream as people always have done. Individually, they make decisions about their lives in an attempt to improve their situations. Collectively, their decisions reveal preferences that are of interest to futurists. We can develop theories and models of how we expect people to behave, but it is their actual behaviour that validates our theories and models.

Their was an interesting report this week that told us that about 10% of the UK population currently lives overseas, either full time or part time (see News Item ). The top locations are currently Australia and Spain. Within Europe, Spain, France, and Ireland are the top destinations for expatriate Britons. We feel that this is evidence of a big trend that will have some significance in the future.

The more we find Britons retiring to sunshine destinations in France and Spain, the more we find French companies locating in the UK to enjoy a lower tax regime, the more we find Polish plumbers locating in the UK to find a better lifestyle, the more Europe will become integrated from the 'bottom up'.

We can talk about European integration at a high level, but this suggests a presumption that a 'top down' solution will be imposed upon the populations of Europe. This couldn't be further from the truth. What is actually happening is that hundreds of thousands of people are voting for integration by making it happen. Actually integrating into another European nation by living there. As this trend continues, the European experiment is more likely to become irreversible.