The turn of the rate cycle, the waning of the West, stochastic staffing.
Plus, the strategic benefits of Slav-on-Slav violence, the end of Zip Car, of the Bill Gates Climate Office, and new life for Round Up.
The trend stayed your friend
2025 draws to a close, in many ways much as we expected, although the AI frenzy was a jaw dropping bonus. Our Momentum model signalled the waning of the West, with various (not always the same) Far Eastern buckets enjoying a rare persistent position, as regional winners.
We had flashes of European supremacy, even of Latin America, and the persistent US dominance, but most clearly a newer strength across the Pacific. Meanwhile, gold stayed entrenched.
Not really a year to fight the trend, it remained your friend.
It continues to pay to have a bit of self-awareness, in the age of increasing AI use.
We are now seeing the end of this rate cutting cycle, due to the failure of a recession to arrive, despite repeated forecasts. Inflation still marches on, which means (somehow) real pricing power exists, and hence demand. Without prices falling, a recession still looks notional.
I expect some rate cuts on into 2027, as we are nowhere near the pre-COVID levels, and I don’t really see rate rises in 2026, although I agree they are now more likely than they were.
Chaos on the line
Some other domestic themes emerged, one is the clear failure to control stochastic staffing, which still hits all service sectors – rail and the NHS are specifics. The idea that higher pay would reduce rail cancellations, hospital waiting lists, or court backlogs, seems pretty risible now.
The great give away, in higher wages has solved nothing.
Indeed, higher pay means less interest in overtime, and for many, fewer hours but the same level of pay. The chaos persists, in the justice arena: consolidation in police forces, abolition of PCCs and now ditching jury trials for many offences, including ones with longer custodial sentences. Who would have thought it – an ex-Director of Public Prosecutions would be keen to bin jury trials…
And rail? No sign of new cap ex, new or even enough rolling stock, overcrowding is normal and indeed now advertised, cancellations standard. Managers seem to have no idea of staff availability next week, let alone next year.
All the uncertainty is now loaded onto the customer, the patient, the victim.
Until we get a grip on that issue, I doubt if public services of acceptable quality can ever again be funded.
Glimmers of hope
But this Government (as all governments do) has some talent, some thinkers outside the box, and some realists. I would include the Home Secretary, sounding far more practical on migration, understanding that much as we all like it in theory, it causes public service overloads and lowers wages, while raising house prices.
Our approach needs a sharp shift towards assimilation, and inbound restraints, until that can be done. Will she succeed? A big ask still.
But on housing, joined up thinking remains elusive. Politicians must just provide three things, roof, job, bread. They are still failing on the first, with too many contradictory ideas.
Dimmed lights
What of Slav-on-Slav violence? Since the Romans, and particularly during the slow ascendancy of the West in the second millennium, this has generally been good news for Western Europe. Warfare across the Caucasus, around the Black Sea, and further North, provides a secure chokepoint, protecting Europeans from Eastern marauders, cheap goods, and the vastly productive output of Central Asia, be it minerals, textiles, or indeed people.
The fertile and favoured lands of the lower Danube and Dnieper basins remain underdeveloped, as they have for two thousand years. Largely that has benefited Atlantic Europe.
Of course, it is always better if the Slavs self-finance their vendettas, even more so if they keep our citizens out of it. While if America can be persuaded to waste treasure on such matters, that too is a win for Europe.
So, on the strategic level, there is much to be grateful for.
That it is a human disaster, that it shuts off highly productive land for the global poor, that it has crippled the Donbas, once a competitor for European steel, empowers China and ends cheap terrestrial energy supplies, are of course widely admitted downsides.
Yet to see this pointless war ramble on into another year, still seems to count as a plus in European capitals, and creates a new, highly protected, citizen financed, industrial growth area in military equipment.
Plenty of jobs are being built on Slav misery.
This also created an excuse to slash Foreign Aid. At least we are not alone; that aligns with Germany, France and indeed Trump, to deliver a real co-ordinated gut punch to the global poor.
Other own goals
Nice to see some pleasing straws in the wind, on the environment front too.
I took especial pleasure in the closing of Zip Car’s UK operation, an irritating, highly subsidised, car park stealing fantasy: no sensible insight into human behaviour, just built on hope.
It was almost as good to hear the Bill Gates initiative which funnelled money into supporting a Climate Change office, has finally halted. He realises now, that is the wrong fight.
If all those blind alleys close, maybe we can get back to doing more for nature, human health and our actual environment – the one we live in?
And finally to Round Up, every gardener’s ally, the only thing brambles and nettles are truly scared of. Still widely sold (and used) in Europe, this has now got Donald Trump as an ally. Some pushback on the fruitful, longwinded, fallacious US litigation against the European manufacturer. What a fine (albeit poisonous) alliance that could be.
We wind down into Christmas: our own stochastic staffing model is heading for January 11th, 2026.
Although our optimism (really!) remains alight for 2026.
A Merry Christmas to you.