PWC has provided its annual report on the economic outlook for the UK. It piqued my interest because it also mentions some future predictions for the United States.
The first key message was that despite all we heard last year, Brexit is decidedly not going to destroy the UK’s economy. Unfortunately, the continued uncertainty about whether or not the vote is ever going to be final is going to be an issue on its own, although the UK should be able to avoid a recession.
In our main scenario, we project UK growth to slow to around 1.6% in 2017 and 1.4% in 2018 due to slower consumer spending growth and the drag on business investment from ongoing political and economic uncertainty relating to the outcome of the Brexit negotiations. The Budget had little net impact on the growth outlook from a macroeconomic perspective..
As for the second message, you’re pretty much screwed if you’re a truck driver or assembly line worker or financial services employee and more than 15 years away from retirement. Your glorious future on the unemployment line is all thanks to the benefits of automation.
Specifically, based on our own preferred methodology, we found that around 30% of jobs in the UK are at potential high risk of automation and around 38% in the US (by the 2030’s).
PWC questions whether the best solution is either to encourage MOAR FREE SHIT in the form of either expanded taxpayer-funded vocational training in sectors that are less susceptible to automation (such as health care) or to simply provide a guaranteed basic income reminiscent of the good old days of Bread and Circuses Rome.
Most of the work in Imperial Rome was performed by slaves, both skilled and unskilled labor. The poor citizens were entitled to a basic income of a wheat entitlement. Are we simply going to return to that with robots and software in place of slaves and a couple of thousand dollars to live on each month so I can focus on blogging? Sure, why not. Of all out-there left-wing ideas, the guaranteed basic income is one I find to be seductive. More on that another time.
Finally, the outlook for GDP growth is fantastic. If PWC’s prediction is correct, the Trump Administration is in for a happy ride in its first two years.
Average annual GDP growth under Obama was only about 1.5%. To absolutely assure re-election, I would say Trump would have to get it over 3% for at least one quarter in 2020. Of course, we could hit a recession during the election year and that would sink him.
Still, I fully expect that in 2018–if PWC is right–Trump will never miss an opportunity to brag about economic growth. Will it have anything to do with his policies? Probably not, no. It’s all in his control as much as the Rise of Droid Truckers and Hookers is. We’ll see if it holds.
If you’re inclined to read the whole document, it’s here.