In the last of his three-blog series, Money&Co.'s head of communications and content, Martin Baker, makes his final calls for 2015. His views are personal and do not necessarily represent the views of Money&Co.
Here we have the final predictions from a list of ten for 2015. These last three concern the broader economic, industrial and geo-political environment. I hope number eight isn't as serious as I fear it may be. Oh, those Russians...
Europe's use of trade sanctions is causing all sorts of economic and political pain. Pro-Russian advocates argue that the West has treated Russia badly, and that the Ukraine is and should be immensely closely connected to Russia. Russia's difficulties arte compounded by tumbling oil prices. As I argue below, the collapse of the market in this key commodity may be no organic accident.
If it continues, Russia may well act in a way that the West will not like. I have become something of an amateur Russianist in recent years, having researched a financial thriller that draws on Russian social and business culture. One conslusion I quickly came to was that respecting and understanding the culture of Russia and Russians is an essential pre-condition to doing business there (see this piece in Business First magazine, timed to coincide with the publication of Version Thirteen, a thriller set in Moscow against the backdrop of a manipulated oil price).
The point is simple and scary: We are one step away from catastrophe here.
A low oil price means that fracking becomes unsustainable. Thus as traditional methods of producing oil re-assert themselves, OPEC will recover all its power. OPEC has consistently re-stated its intention not to cut production, and the price keeps on falling.
Worryingly, the Russians are not the only ones to find this disconcerting. Many banks have extended huge lines of credit to frackers – and if those loans are not supported, we may see a real problem with the already fragile banking system.
10. As I stated in the first blog in this series, I expect a half-point rise in base rates before the end of the year. While this will not be much help to income-dependent savers, whose returns from bank deposit accounts will still be negligible, it should act to quell house-price inflation. The recent changes in Stamp Duty have seen London property prices fall by half a point. Property is overpriced, so a bit of shrinkage would be a good thing.