Jim O’Neill, a former UK treasury minister, has been scattering pearls of wisdom (paywall) on the big economic issues to expect next year.
The effect is a bit ruined by the fact that Lord O’Neill confesses it’s a “parlor game” and everyone just pretends to know what will happen in the next 12 months. The pandemic has induced so much uncertainty, he adds, that “when it comes to 2022 (and beyond), I am not sure whether it is worth even pretending. I cannot recall a previous time when there were so many big question marks looming over so many key economic issues.”
The deep uncertainty, he says, is not just because of the coronavirus. There’s inflation, too. “Are this year’s price increases transient, or do they represent something more ominous?” Lord O’Neill asks (but doesn’t answer).
No one knows, in part because as he notes, supply shortages themselves “may be symptoms of bigger problems, such as economic over-stimulation, ineffective monetary policies, or weak productivity growth.”
Some of the other issues that will hang over 2022 include:
** monetary policy – its purpose in today’s economy
** government debt – should we worry about how high it goes or does its purpose somehow relieve it of being evil? As Lord O’Neill writes, “Debt incurred to prevent a collapse in economic activity is quite different from debt incurred simply to fund an overly ambitious government’s agenda.”
** productivity growth – do pandemic-driven changes in behaviour mean greater productivity?
There aren’t any clear answers to any of these questions – not from Lord O’Neill or anyone else.