New year predictions are always rash, but it feels as though one aspect of the story of 2025 can already be written. The gap between the economic fortunes of the US and Europe will continue to widen – and Britain will be trapped very much on the European side of the divide.
In three weeks’ time the US will have a new leader, one who will unashamedly put the interests of US business first. Donald Trump’s threat of punitive tariffs may or may not be realised (as in his first term, it could prove to be a negotiating tool to press for the removal of restrictions on US exports and an end to currency manipulation by China). But several things are certain. A Trump-led US will not be adopting a growth-destroying social democratic model. It will continue to pursue a policy of cheap energy and of energy self-sufficiency, and will not be strangling its industry with net-zero targets. Elon Musk will oversee a sharp contraction in the size of the federal state, with tax cuts to follow. Unproductive government officials will be sacked, not treated to four-day weeks.
How different Britain’s prospects look. We have a government which preaches growth and yet seems to understand nothing of the conditions in which it thrives. Ever since the Labour party began to accuse the Cameron government of ‘austerity’ for daring to attempt to balance the public finances, it has seemed to operate under the belief that only the public sector can generate economic growth. It sees the private sector, by contrast, as there to be plundered.
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