As I sit in my office ten years after the onset of the Global Financial Crisis, it is hard not be aware of the impact this seminal moment continues to have on economic developments around the world today. Perhaps inevitably, I also wonder as to how much longer the ramifications of that event will endure. Could it, I muse looking back from the vantage point of a further fifty years on, prove to be the defining point of the century.
Now let’s be clear, as 2018 draws to a close the global economic performance actually remains quite healthy, However beneath the surface, the rumbles of discontent can be heard as significant challenges become ever more evident. At the top of my list of concerns is the re-awakening of a protectionist ethos, currently being most visibly played out between the US and China, and the potential shift away from a multilateral, rules-based trading system. The impact of the measures already implemented will be felt over the coming years but there is also the potential for it to develop into something much more damaging. Alongside this, the rise of populist politics is leading to greater uncertainty about the direction of policymaking beyond trade. Although this has yet to have a meaningful impact on business activity and employment levels, the danger is that it will increasing erode confidence and, in due course, be reflected in living standards. It may also inhibit co-ordinated action in addressing the big issues of the day including climate change.
How this all plays out in the near term remains to be seen particularly as the current economic expansion has been quite extended by historical standards. But over the longer term, the continuing elevation of new superpowers onto the global economic stage could provide the basis for the re-emergence of a more outward-looking and a growth enhancing orientation to macro policies. The developing economies of today will inevitably begin to play a much bigger role in establishing the direction of travel and setting the parameters around engagement. China, India and Indonesia will be amongst leading players in the new world order while the west will inevitably see its influence retreat. Whether this results in a more inclusive approach to policymaking remains to be seen but it is likely to move the world beyond the prevailing (and unbalanced) unipolar environment.
The principal risk to this (generally) benign outcome is that the disruption created through the shifting balance of power leads nations and regions to become more insular as they attempt to address the consequences of change for both international status and (relative) living standards. This has the potential to result in a more fractious global environment as the framework that has helped to promote both a huge rise in well-being and a reduction in global poverty over the past fifty years is undermined.
I certainly hope that this is not the environment that greets whoever occupies this seat come 2068. Actually, I have enough faith to believe the world will be in a rather better place but only you will know if I am right in this conviction.
Simon Rubinsohn is responsible for overseeing thought leadership within RICS including managing the high profile suite of market surveys. He is closely involved with policy development and regularly works with Bank of England officials on issues related to the real estate sector. He frequently speaks at conferences focusing of both residential and commercial markets and is regularly quoted for his insights in the media.