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What Does The Future Hold?



Last week I did a talk entitled ‘2030’ – a topical title these days given the cloudy outlook and there are already some decent books such as Jim Stavridis’ ‘2034’ that look out that far. Yet, the fallacy of forecasting is to try to imagine discrete events in the future – a better starting point in looking ahead eight years is to go back eight.

Russian invasion

If we travel back to 2014, the key events were Russia invading Crimea, Britain’s existential political struggle (Scottish independence), an epidemic (Ebola in Africa), pro-democracy protests in Hong Kong, an economic crisis in Europe, the election of Modi in India and Iranian nuclear talks. Many of these phenomena are still with us (Modi, Iran), others ‘we’ failed to take seriously as portending more serious developments (Russia, Brexit, Epidemic, HK). In particular, the last four have stress tested globalization and found it wanting each time.

If, based on the comparison of 2014 to today, we extrapolate a trend in the behaviour of nations then we might hazard that by 2030 Russia and China will form a lonely anti-Western alliance, Emmanuel Macron will be President of the EU, Hungary will be been forced out of the EU replaced by Scotland, several international conflicts have been caused by food and water shortages, despite massive advances in healthcare technologies.

Alternatively, a contrarian or controversialist view might see Russia applying to join the EU, the UK becoming the Singapore of Europe, Japan quickly building a nuclear weapons program and a metaverse driven mental health epidemic.

That demand for ‘2030’ vision is high, is attributable to the end of globalization and the opening up of uncertainty over issues like geopolitics and more recently monetary policy and financial markets.

As we stressed in last week’s note, I believe we are now into a phase called ‘The Interregnum’, one where the old order is being broken down and slowly new structures will be built up. My endpoint is a multipolar world of large regions who ‘do things’ differently. How well formed this will be by 2030 is hard to tell.

There are a few tectonic shifts that I would like to highlight, the first of which relates to geography.

Going back to Paul Krugman’s early work on geography and trade, the great triumph of globalization is that it undercut geography in the sense that industrial production and even less so trade, were tied to geography. Tom Friedman’s ‘The Earth is Flat’ was a schmaltzy celebration of this.

Values triumph over globalization

In the next eight years and beyond, geography will again be undercut by the notion of ‘values’ or ways of doing things. The European Union is driven by a values based approach to its community (much of which is lost on its 500 million citizens), based around social democracy. As an example, Hungary is an EU member but its leadership and electorate increasingly express a very different set of values, which is why I consider it may not be an EU member by 2020. In contrast, the British value system is consistent with that of the EU, which is why Scotland would relatively easily be a member and England can continue to cooperate closely with the EU on international affairs.

A values based approach to politics and diplomacy is quite different to the idea of alliances that have historically bound nations because values are deeply rooted in the culture of regions and the behaviour of their citizens. In that respect however, Europe is the least interesting of the regions.

In the USA, whether people realize it or not, there is a grand contest ongoing over values, the latest battle ground of which is Roe v. Wade, and across Asia countries like the Philippines and Thailand on one side and Japan and Taiwan will interrogate their value systems relative to the role of China in Asia, the stresses on both autocratic and democratic models of governance and socio-economic topics like immigration.

One of the most pertinent indicators of ‘value’ based approaches is the treatment of women and the LGBT communities. There is a very strong correlation between these factors and other important markers such as the quality of democracy, innovation, quality of life and human development variables. Small advanced economies are a great example.

In economics, I have already speculated that the very long business cycles of the past thirty years will likely be replaced by shorter boom-bust cycles, not least because there will be less synchronicity between the large economic regions.

Another major, likely change with 2030 in view will be the transition of corporate business models from the ‘globalised’ one (where different functions could be dispersed around the world) to one where there is more of a focus on the vertical industry chain – a process that is dominated by two factors, a community of users or clients (think of fintech or health tech) and a skeleton of very efficient technology that links them with services.

Climate damage

I want to finish this week’s note by returning to 2014, and offer a final thought to scare you on a Sunday morning. Many of the crises of our day were prefigured in 2014. The one recurring danger that is manifest across the world is climate damage – parts of east Africa have not seen rain in two years, India is experiencing brutal heat. In this respect I think the extent of climate damage and the policy reaction to it will be the swing factor that determines what 2030 looks like.

Have a great week ahead,


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High import tariffs lead to baby formula shortage in US: Report | World News



With only four major manufacturers of formula in the United States today-Mead Johnson, Abbott, Nestle, and Perrigo, some 40 percent of the nation`s baby formula has been out of stock recently, causing new mothers to hunt from store to store to feed their infants. “One reason the market is so concentrated is tariffs up to 17.5 percent on imports, which protect domestic producers from foreign competition,” said The Wall Street Journal last week, citing the Donald Trump administration`s efforts to protect domestic formula producers by imposing quotas and tariffs on Canadian imports in the United States-Mexico-Canada Agreement trade deal.

“America`s baby-formula shortage illustrates how bigger government can make big business bigger, thereby limiting competition and choice,” said the newspaper, noting that this is especially worth noting as Democrats push to expand entitlements and government control over the private economy.

It also illustrates that global trade has its uses, and there are costs to the faddish drive to produce everything in the United States, according to the report. “Members of both parties in Congress want to subsidize domestic production, but this can create its own supply-chain vulnerabilities,” said the report, adding that “globalization nowadays may be a dirty word, but having diverse suppliers is an economic strength.”


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India will provide 25% of global workforce and contribute 15% of world GDP by 2047: Scindia



Union Minister Jyotiraditya Scindia has said that India has to focus on “building capability, capability and capability” as the country is on the road to providing “25 per cent of the total global workforce and contributing 15 per cent of global gross domestic product by 2047”.

“India has shown that the Indian way of globalisation will show the path for globalisation that will be balanced, decentralised, symmetrical and pivoted on territorial integrity,” Scindia said at the India Ideas Conclave here on Saturday.

Speaking on India @2047 at the conclave organised by India Foundation, the minister said if democracy was prospering in different parts of the world, “some level of the credit should come to India”.

According to Scindia, there are eight pillars for the India model, which “had shed the socialist straitjacket and myopic ideas and replaced them with Atmanirbhar Bharat”.

The BJP-led government has been transforming the country by empowering the people through direct benefit transfer, the minister said. Scindia said that in the past eight years, $200 billion was distributed among 950 million people—$86 per person, adding that central schemes would benefit every citizen and the per capita income would rise above Rs 4 lakh by 2047. This was Rs 53, 000 in 2010-11.

According to the minister, the second pillar is infrastructure development focusing on the streamlining of logistics for urban areas and on last-mile connectivity for rural areas. Technology will be the third pillar. “Technology today is all pervasive—India has moved a long way in it. The amount of digital transactions happening in India is equal to the GDP of 21 countries,” he said. India’s power is that it has a billion people with their biometrics digitised and there are a billion bank accounts, he said.

According to Scindia, the fourth pillar will be the “paradigm shift” in the GDP position. With production-linked incentive schemes in place in sectors like telecom, semiconductor and drones, 35 per cent of India’s GDP will be from manufacturing, 10 per cent from the agrarian sector and 55 from the service sector, he said, adding that the transformation of the tier-two cities into tier-one cities would further strengthen the economy. The minister listed the rise of the urban economy as the fifth pillar.

Scindia said demographic power would be the sixth pillar and India would provide 25 per cent of the global workforce. While diplomacy and diaspora, which Union minister said Prime Minister Narendra Modi had reinvented to India’s advantage, will be the seventh pillar and India’s global standing will be the eighth one. “The geopolitical climate is incrementally favourable to India, thanks to our foreign policy,” he said.

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NatWest’s Sir Howard Davies: ‘I’m quite pessimistic. Brexit was a significant mistake’ | Banking



Sir Howard Davies is a worried man. He is worried about political polarisation. He is worried about the long-term impact of Brexit on the City of London. And he is worried by the pushback against globalisation.

One thing he is not especially worried about is the health of the bank he chairs, NatWest, which in its former guise as Royal Bank of Scotland was on the edge of collapse during the global financial crisis of 2008.

Davies has been chair of NatWest for seven years and the turning point in the bank’s fortunes, he says, was paying a $4.9bn (£3.6bn) fine to the US authorities in 2018 for its role in the sub-prime mortgage crisis. Until that point, NatWest had been “scrambling behind the sofa” to find capital, but now it is in better financial shape than many comparable European banks and has been able to expand. It has, he says, been “a game of two halves”.

The footballing metaphor is telling because Davies has another concern. As a lifelong Manchester City fan, he fears his side will be pipped to the Premier League title by Liverpool in Sunday’s last round of matches. To mitigate the


Age 71

Family Married to a lapsed journalist. Two sons, one left, one right.

Education Bowker Vale primary; Manchester grammar school; Memorial University of Newfoundland; Merton College, Oxford; Stanford business school.

Pay “The usual answers are ‘enough’ or ‘no comment’, but £750,000 is published in NatWest’s accounts.”

Last holiday Cycling along a section of the Rhine path. “One day I will complete it.”

Best advice he’s been given “Always show you could do your boss’s job if required.”

Biggest career mistake “Agreeing to be director of the LSE. It ended in tears.”

Word he overuses “Guardiola, as in ‘we’ve got Guardiola’, sung to the tune of Glad All Over.”

How he relaxes Playing cricket, and listening to pianist Brad Mehldau: “Not usually at the same time.”

potential agony, he has staked £100 at 8-1 on Liverpool adding the title and the Champions League to the FA and Carabao cups they have already won.

It’s an “emotional hedge”, he admits, as he discusses a career spanning half a century in which he has worked at the Foreign Office, the Treasury and the Bank of England, and been Britain’s top financial regulator, director general of the CBI, a management consultant, and the head of the inquiry into UK airport capacity.

Asked which of his many jobs he has enjoyed the most, he picks none of the above but plumps for running the Audit Commission (subsequently scrapped by David Cameron’s government), which looked into whether local authorities were providing value for money.

“It was a riveting job. I found you could make significant improvements to local services, where the variations were absolutely enormous. It was really interesting and rewarding, and you could actually see you were making a difference.”

Far less enjoyable was the end of Davies’s stint as director of the London School of Economics after concerns were raised about the school’s decision to accept funding from a foundation controlled by the son of Muammar Gaddafi.

Davies says he never asked for money himself and thought there was something not quite right about the arrangement, but accepts that he should have spotted the potential for trouble. “There is no doubt I made a mistake. I should have stopped it and I didn’t.”

His latest project is a book – The Chancellors, published by Polity Press – about the Treasury’s role in the running of the economy under every chancellor from Gordon Brown to Rishi Sunak.

Davies was made head of the Financial Services Authority by Brown when supervision was hived off from the newly independent Bank of England in 1997, and he later faced criticism for failing to clamp down heavily enough on the City during the buildup to the crash of 2008. “At the time, people moaned about financial regulation being too tight and that I was judge and jury in my own court,” he says. “I was accused of being an overmighty regulator who was getting in the way of ‘animal spirits’. There was never any criticism in the other direction.”

Asked which of the recent chancellors he has most time for, Davies picks Alistair Darling, whose three years at the Treasury between 2007 and 2010 were dominated by the banking crash.

“Alistair had terrible hand to play. He had no money, a financial crisis and his predecessor as his boss. There wasn’t anything Alistair knew that Gordon didn’t. Yet he was completely unflappable.”

When he started writing the book, Davies was convinced he would conclude that the Treasury should be broken up into separate finance and economic departments, the model preferred by most other European countries. He has since changed his mind. “A bit of check and balance in our system is a very good idea,” he says. “If we divided responsibilities and had a department of economic affairs and a ministry for the budget, they would separately be less powerful than the Treasury is together and that would give No 10 free rein. That would be a mistake.

“This prime minister hated the Treasury partly because of its pro-EU views, or perceived pro-EU views, and role in the referendum. But when he got himself in a hole, who else but the Treasury could bail him out?”

If Davies is upbeat about the prospects for NatWest, he is less positive about what the future has in store for the UK. “I am quite pessimistic actually. Brexit was a significant mistake. You don’t solve the problems of the left-behind by damaging the one area of the country that’s been writing the cheques. London is paying large amounts of tax and will be damaged by Brexit over time.

“I worry about political polarisation. The same thing is happening in France [Davies teaches in Paris] and in the US. It is possibly less bad here than in the US or France, but I sense a kind of bitterness in public life which doesn’t create a good environment for rational solutions to problems.”

Davies says that when he first came to London from Manchester in the 1970s the capital was “gloomy” and “monochrome”, yet subsequently became a vibrant, multi-racial city. He fears the pendulum could now be swinging in the other direction. “China is separating from the US and there is this war [in Ukraine]. London has been the beneficiary of globalisation and if it goes into reverse, maybe the global city is past its peak.”

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