Most of us are hoping for a quieter year in 2009, but with a recession beginning to take hold, the expectation is of a long and painful hangover destined to give us all a headache. The Gateway consulted the experts to find out what they are predicting to take place over the course of the coming year.
Doom and gloom remains the general consensus across the media. According to The Daily Telegraph, the UK's economy will shrink by 2.5pc in 2009 meaning that in terms of economic growth the year ahead is shaping up to be substantially worse than any experienced either in the early 1990s or the 1970s. A number of economists in fact predict that it will be the worst year for the economy since 1947. The weekly news publication, The Economist, estimates that the UK will be amongst the ten fastest shrinking economies in 2009, second in the EU only to Ireland and behind the United States.
The good news is that the financial broadsheet, The Financial Times, is hopeful of a recovery - meaning the resumption of economic growth, however small - which is expected to be on the way in 2009 for most developed economies. The bad news is that the UK wont be one of these as is the case for the US, Spain and Ireland. The rest of continental Europe, along with Japan, should, with any luck, begin to move out of a recession towards the end of the year. As far as stock markets are concerned, the expectation is that there will be no dramatic falls, akin to those witnessed this autumn.
The president-elect has wasted no time in revealing his plan to get the economy back on track with a huge $800bn fiscal stimulus plan which aims to create job and cajole the economy back to life through a large scale infrastructure development programme. The Financial Times is wary of comparing the plan with Roosevelt's 'New Deal' which was largely credited with dragging America out of the Great Depression and market the birth of the social security system in the US, but believes it will be effective in ending the recession, though not before 2010 at the earliest. More interesting will be if and when Obama will look to implement his promise to create the free healthcare system America so badly needs. For further comment on this topic, check out our focus on Obama's inauguration on page 18 of this issue.
In 2008 markets only went one way: down. Will there be a market rebound in '09? According to The Times. Western markets should remain fairly consistent, with the majority of commentators expecting the FTSE to start to recoup some of the losses it suffered last year, perhaps reaching 5,000 points. With business confidence extremely low, however, it is likely that we will have to wait until 2010 for a substantial recovery. Elsewhere, emerging market exchanges are tipped to fare better according to Morgan Stanley, having experienced substantial losses last year. They are expected to rise as investors look to capitalise on the continued growth of these economies whilst the developed world remains in recession.
The media has been unrelenting in its forecasting of large scale job cuts over the coming year. With unemployment currently hovering at 1.86 million, The Telegraph expects another 600,000 jobs to go in the UK during 2009 with 34,000 of these in the City. The total number of unemployed could potentially reach three million during the course of the current recession, nearing the total reached in 1984 when the level of unemployment reached 12%. Those who keep their jobs are expected to page wage freezes or may even be made to accept a cut in salary. Quoting The Chartered Institute of Personnel and Development, the paper expects the beginning of the year to suffer the greatest losses as businesses prepare themselves for a difficult year ahead by shedding staff. Relatively good news for soon-to-be graduates at least if we are to infer that things should have cooled off towards the end of this year.