George Kerevan: 2017 might spell party time for the global economy but a crisis across Europe

How will the global economy fare in the next twelve months? The US Fed has just raised interest rates and we can expect more rises throughout 2017 if President Trump starts spending on infrastructure, boosting inflation. That will have knock-on effects across the world. Higher American interest rates will boost the value of the dollar. Capital will flow from Asia and China into the US. As a result, other countries will have to raise interest as a defensive measure. That means dearer mortgages and credit card bills for consumers and governments paying out more to borrow. Call it the Donald Effect.

However, Trump may tear up the regulatory rule book and slash business taxes. That will trigger an economic boom that could spread – temporarily – around the world. Of course, in the longer run it will lead to prices rises, even higher interest rates and add to the US national debt. Worse, it will stoke dangerous international rivalries in a way we have not seen since 1914. But for 2017, it could be party time in the global economy.

In China, 2017 is the year of the Red Fire Rooster, when portends are deemed unlucky. President Xi has accumulated more personal power than any of his predecessors since Deng Xiaoping, and he is using to pump up consumer credit at an alarming pace, to buy off unrest. Meanwhile, a new neo-Maoist movement is gathering pace which is opposed to the capitalist way the regime is heading. Xi has retaliated by invoking the name of the Great Helmsman himself, in speeches. That could backfire precipitously.

Over in Europe, we have key elections in France (April), Germany (probably October), and probably Italy. At stake is the entire future of the EU and Eurozone. In France, the two key presidential contenders are the anti-EU, anti-euro, anti-Nato Marine Le Pen versus an avowed Thatcherite, Francois Fillon. If these are the two contenders in the second voting round, and Le Pen plays a populist card, she could win. Yet if Fillon triumphs, France will be seized by industrial and social unrest. Angela Merkel may scrape home to a fourth term as German Chancellor later in 2017 but Europe will be mired in crisis.

As a result, next year could be a bad one for the eurozone – or a good one, depending on your point of view. There is a rising tide of voices in many countries – among politicians, bankers and economists – to ditch the euro and return to local currencies. This is true even in Germany as well as economically feeble Italy. Dumping the euro would allow Italy and Greece to escape deflation and return to economic growth by devaluing their (revived) currencies. The first to go could be Italy if the populist 5 Star Movement wins the expected general election. Other countries would follow, leaving the diminished eurozone as essentially Germany and its close economic satellites in Eastern Europe.

One exception where there might be good news in Europe in 2017 is Catalonia. Come September, the Catalan Parliament intends to hold an independence referendum. The minority Spanish Government in Madrid – possibly to divert attention from its own problems – has charged elected independence-supporting politicians across Catalonia with various infractions of Spain’s draconian constitutional laws. Under these, it is illegal simply to seek to undermine the unity of the Spanish state. Among those charged is the speaker of the Catalan Parliament, Carme Forcadell, whose “crime’ was merely to allow the Catalan Parliament to debate independence.

Next year is a year of anniversaries, with the centenary of the Russian Revolution looming largest. It represented a massive popular uprising against an insane and brutal war of expansion by all the great powers and a brave, if utopian, vision of creating a world based on community, fraternity and sharing the fruits of labour. We might note in passing that the real end to the First World War was when the German army mutinied and simply went home. If everyone had adopted that approach, the carnage of the Great War would have been avoided.

We will also see the centenary next year of the so-called Balfour Declaration, signifying Britain’s diplomatic support for a Jewish “homeland”. This is named after the then Tory foreign secretary Arthur Balfour, whose seat at Westminster I now hold. Add in the fact that 2017 is 50 years on from the Six Day War in which Israel took the West Bank from Jordan, and there is scope for a lot of historical navel-gazing next year.

The Balfour Declaration was timed to undercut the leadership of the anti-Czarist revolution in Russian, which the Foreign Office saw as in-part a Jewish-led affair. What better way of diverting Jewish support for the Russian Revolution than by making vague promises about a Jewish homeland in the old Ottoman Empire. You will not be surprised to learn that the key Foreign Office official who helped draft the Balfour Declaration was a certain Sir Mark Sykes, co-author of the infamous Sykes-Picot Agreement to carve the Middle East into the modern Syria and Iraq, the better to let France and Britain divide and rule.The citizens of Aleppo are suffering this Christmas as a direct result of that European power play.

Though the Balfour Declaration promised Jewish people a “homeland” it was careful to point out that was not to be to the detriment of any other indigenous peoples of the area. In other words, it promised something for everyone in a country that Britain had no jurisdiction over, the better to contrive a foothold in the Middle East to further British economic interests.

What’s in the offing for technology in 2017? We are certainly heading towards a national or sectoral splintering of the internet. Rival nationalisms, security considerations and the urge by government to control citizens, will all play a part. Equally, the relentless rise of blockchain technology may help individuals to undermine the desire of Big Data to plunder their personal information. We are also promised a robot that fold clothes.

Finally, what does next year hold for Scotland? As Brexit-wars intensify at Westminster and Theresa May finally has to get off the fence regarding her negotiating stance, the SNP parliamentary group will lead the fight to protect to protect Scotland’s place in Europe. If we are denied that basic demand, then I see another independence referendum coming. I’m really looking forward to 2018. As for 2017, enjoy it while it lasts. And a Merry Christmas.