“Oh good, because you’re always wrong”
A reckless look-ahead at 2025
Next year’s swiftly falsifiable predictions1
January/February: Street protests, strikes, and President Salome Zourabichvili's dual power force out Georgia’s government and lead to the election of a Western-oriented coalition.
January: Donald Trump takes office and shocks official Washington by taking himself “literally”2 on trade, fiscal policy, judicial revenge, and Ukraine. Nothing can tame him except the S&P500.
February onwards: After two bilateral summits, EU-UK rapprochement accelerates driven by America Firstism and preparation for muscular peacekeeping in Ukraine.
March/April: In Germany, a CDU/CSU-led coalition is formed with the Greens and, if necessary, the SPD. Meaningful fiscal reform is too cumbersome but incoming Chancellor Friedrich Merz is keen to prove an active partner in Ukraine and will find workarounds for extra military spending.
Summer: French President Emmanuel Macron - after devoting six months to putting together a Ukraine peacekeeping force with Poland, the Nordics, Baltics, the UK, and the Netherlands - will be forced to dissolve the national assembly again. Another hung parliament piles pressure on Macron to resign and allow for a presidential election in September. Marine Le Pen loses for the last time.
Autumn: A Korea-style conflict freeze comes to Ukraine, which will be policed by European troops supplemented with US equipment and spy technology.
Georgia’s “firework revolution” and the demands of the Kellogg process force high-speed innovation on the EU (and NATO) - developing staggered accession plans and halfway houses for Ukraine, Moldova, Georgia, the Western Balkans, and - not to be left out - Armenia. Hungary and Slovakia f*** around and find out.
Nothing sucks the glamour out of reporting more quickly than doorstepping. Waiting outside a building for hours to ambush an official with a question you both know will be ignored or deflected soon becomes old.
That said, reporting things that have happened does have its comforts. Predictive writing – my profession for the past 25 years – may be more rewarding (in both senses) and especially satisfying when you call it right. But, when you’re wrong, it’s grim. There’s no place to hide.
Well, there is for the shameless. Nate Silver’s victory lap after the US presidential election before which he ran 80,000 model simulations in which Kamala Harris beat Donald Trump in 50.015% of cases was magnificent in its brazenness. “A 50-50 forecast really does mean 50-50,” he lectured us. “You should be open to the possibility that those forecasts are wrong, and that could be the case equally in the direction of Mr. Trump or Ms. Harris”. When Trump won, so did Nate.
At least we get an opportunity to admire Silver’s chutzpah. True masters of the provocative “big call” like Paul Krugman, Wolfgang Münchau, and Ambrose Evans-Pritchard don’t afford you even a moment to point and laugh before they’ve moved on to the next one. They get away with it because, since media futurology is cheap and entertaining, bad calls are forgivable. Less so to investors who pay people like me to predict the behaviour of central banks, governments, and electorates - flaky, data-poor decision-making committees with tens of millions of members. Some clients enjoy outside-the-box thoughts but they pay for predictions that are under-priced, backed up by evidence, and eventually right, or for credible reassurance that tail risks won’t materialise.
Check your bias
I’ve been thinking more about the perils of prediction since July 14. The morning after a sniper’s bullet stroked Trump’s ear, a family member asked me who I thought would win in November. Although the data argued for a Democratic victory, Joe Biden’s career-ending debate performance and Trump’s fist-pumping recovery steered me off-message. Trump, I said. “Oh good,” she replied. “Because you’re always wrong”.
Fortunately, my family doesn’t pay me but I know how I became their contrarian political indicator – their Nostrodumbass, if you will. It’s the result of what psychologists call negativity bias. In 2016, I had reassured them that – based on the detailed polling and focus grouping – Britons would vote to stay in the EU and Americans would reject Trump. When “bad things” happen close-up, they’re not forgotten. “Good things”, which can be just as out of consensus, are. Greeks kept the euro. Le Pen lost three elections in 2017, 2022 and 2024. Boris Johnson chickened out of a “hard” Brexit in 2019-20. Trump lost in 2020. With civilians, there are no victory laps for things that don’t happen. In financial markets, there are.
While this is reassuring, it imports another risk of predictive error: status-quo bias. In developed economies with robust democratic rules-based institutions, nine times out of ten, events will play out broadly the same way. Doubly so in the case of the EU and the euro area – the perfectly normal beasts I watch – since these are national market economies bound by law, which are then re-bound by supranational law and mutual obligation. By understanding this, I never deviated from the conviction that the euro area would stay intact. For Greece’s official creditors, disintegration was more costly than debt forgiveness. And for one-time drachma users – to the bafflement of many in the markets who could see only the upside from Grexit and devaluation – the popularity of the euro never deviated throughout the six-year crisis. Equally, for all their grandstanding in 2019, Brexiter politicians were never going to risk instantaneous unpopularity for their project by withdrawing unilaterally from the EU and triggering an economic crisis.
However, while this works most of the time, status-quo bias can blind you to impending shocks. In today’s transparent markets, truly unexpected policy initiatives with a price impact happen for two reasons. Either the politicians involved are too autocratic (Vladimir Putin), hubristic (David Cameron), delusional (Liz Truss), or ill-informed (Trump) to accept expert advice on the impact of their decisions. Or, as happened throughout 2007-10, institutions know something we (the press, markets, and analysts) don’t. Without succumbing to the Krugman-Münchau-Ambrose disease, the predictive writer must keep an open mind and try to find out what those in the know know.
Out with the old
All this was a preamble to a shame-faced audit of my New Year’s Eve 2023 “reckless predictions” for 2024.
Starting with the right and right-ish, I wrote:
The two coalitions of nationalist/nativist parties in the European Parliament elections would add around 40 seats at the expense of centrists and the Greens. After a few days of “Europe swings far right” headlines, the centre-right, centre-left, Renew, and Greens would return to business as usual.
Ursula von der Leyen would be reappointed to a second term as European Commission president and a prime minister (maybe António Costa) would replace Charles Michel as European Council president. Kaja Kallas was well-positioned to become High Representative of the Union for Foreign Affairs and Security Policy, clearing the path for Mark Rutte at NATO.
With Rutte out of the picture, a centre-right coalition would be formed in the Netherlands after 250 days with Geert Wilders as prime minister. Such a government was formed in under 220 days with Wilders’ party but not him.
The struggle for the 2027 Macron succession would begin in earnest after the June European Parliament elections that Le Pen’s RN would win. I didn’t expect Macron to commit suicide by dissolution.
A British election would come early (not in October), resulting in an overall majority for Labour, and exploratory re-convergence negotiations with the EU.
Oh, and two small errors:
Biden would eke out a narrow presidential victory and the Democrats would retake the House of Representatives.
A pre-election armistice in Ukraine would be agreed close to the current line of contact but with both sides maintaining their territorial claims.
As I said in December 2023: “This time next year, just remember the things I got right”.
These are my predictions and not those of Medley Advisors.
In 2016, Trump fixer Corey Lewandowski said: “This is the problem with the media. You guys took everything that Donald Trump said so literally! The American people didn’t. They understood it. They understood that sometimes — when you have a conversation with people, whether it’s around the dinner table or at a bar — you’re going to say things, and sometimes you don’t have all the facts to back it up".