DigiMag Glacier_Q4_2017 - Page 10

SCENARIO PLANNING The grey flag The ageing of the world’s population is accelerating and has already slowed Europe and Japan’s economic growth rate down to virtually zero. America is younger and more resilient and will expand its economy faster. China has revised its one- child policy to a two-child policy because of this clockwork flag ticking away in the background. Nevertheless, public healthcare is becoming an overwhelming issue everywhere as the number of old people spirals upward, with limited resources available to keep them alive. In the developing world, the economies of those countries with competent governments will easily outpace those of the developed world. By the end of this century, Asia and Africa will account for 83% of the world’s population of just over 11 billion. The anti-establishment flag This flag has already produced Brexit in the UK, Trump in America and an outsider like Emmanuel Macron to lead France. This is a cloudy flag because Macron, with his belief in a united Europe, is the exact opposite of the UK’s Theresa May and Boris Johnson. One simply doesn’t know where or how the lack of trust between the public and the political establishment is going to create the next surprise. However, inequality between the super-rich and the rest is still widening so the anger that caused the flag to rise in the first place is bound to increase. The pressure is intensifying on companies to be more concerned and transparent about the ratio of top executives’ pay to workers’ wages. International agreements are also forcing the banks and others to share financial information with governments to stop money laundering and tax avoidance by rich individuals. The game of being a financial adviser will therefore be very different in the future. The green flag The latest example of this clockwork flag’s impact is the projection that global warming will open up the Arctic as a major shipping route by 2050 because the ice will have sufficiently disappeared. Extreme weather is causing extreme drought and extreme rainfall in many countries. California has experienced both in the past five years. America’s continued support of the Paris climate change accord is in doubt – just as scientists are warning that the tipping point for the planet’s sustainability could be earlier in this century than previously thought. The national debt flag This clockwork flag is quietly rising as governments everywhere are abandoning austerity and budget surpluses in favour of the Keynesian solution of running budget deficits to reinvigorate their national economies. As long as interest rates remain low, the effect of increasing national debt beyond acceptable levels is being deferred. As soon as inflation rates start to go up, the era of cheap money will end as central banks raise interest rates. This could lead to defaults on national debt by countries such as Greece and Italy, setting in motion the kind of credit crisis that fuelled the stock market collapse in 2008. The world of work flag High youth unemployment rates will persist until the educational establishment understands the nature of this clockwork flag. Automation, robots and artificial intelligence have completely transformed the world of work from what it was like