CYCLES have existed in the natural world since time immemorial, but one we can regrettably claim of our own making is the business cycle.

Intermittently some profess to have found the means to rid ourselves of this age-old affliction, but that ignores both the modern history of humankind and our very nature. That is why the field of economics is not considered to be fully a science, as there are many factors outside of its scope that play their part in affecting our prosperity, both as a nation and individually.

I choose to write this letter presently, when the world as a whole is in its longest period of economic expansion ever, covering 11 years this March. Over modern times cycles have tended to cover periods of only half that length. On that basis alone, it would seem the world is overdue for another downturn.

However, my belief that we really are approaching the end of this increasingly fragile upward cycle is based far more on facts than on charts. Examples of these are the current excesses of debt held by nations and individual households; the ongoing trade wars between the world’s two largest economies and others; the uncertainty existing while we negotiate new trade agreements with the European Union; the fact that the economies throughout the EU are floundering, including the industrial engine that has belonged to Germany; the instability in much of the Middle East and a possible oil supply crisis should hostilities recur; the current outbreak of the coronavirus spreading from China and the many disruptions it is already causing; recurrent natural disasters such as the devastating fires encircling much of Australia; and the fact the growing number of converging difficulties throughout the world seems to be prompting individuals to reduce their spending; prudent for them but not good for businesses which need their custom.

The main concern this time is whether the globally interdependent world in which we live can withstand another economic shock without truly major consequences. Among countries in the Western world, many have run out of monetary policy tools with which to stimulate their economies. The European Central Bank is operating with negative interest rates, as is Japan, the world’s third largest economy. This already makes little sense, especially to the Germans, and they would rightly so resist vigorously any further reductions.

The temporary measure called quantitative easing, a form of printing money/borrowing, is the other tool some countries used following the 2007-8 crash, but that could not be restarted without serious risks to the world’s financial credibility and stability. Thus, with central banks having used most of their ammunition in recent years to keep the world’s financial system afloat, another economic crisis would leave the majority of governments up the creek without a paddle or life jacket.

As for us in the United Kingdom, we have shored up our banking system a good bit since the last downturn, and the Bank of England has rates at least positive at 0.75 per cent, but it is highly unlikely those two factors would protect us from a major worldwide economic predicament. Governments here at all levels need to be preparing for come-what-may.

Having had to face many public crises in recent years will be of benefit to the various authorities, no doubt. Locally, we are fortunate to have in Tim Farron an MP who is fully focused on and committed to his constituency. As for individuals, each of us needs to ask ourselves “What if?” and then fill in the blanks.

Ira Fishman