Change

Illustration of plant growth out of money

Do lower taxes stimulate growth?

Can the simple act of lowering taxes stimulate growth?  We now know (thanks to Liz Truss) that, when unfunded, tax cuts can certainly trigger economic chaos.  But even if they are properly funded, the question remains, will it really foster growth?

There are many who would argue that it would.  Some even go so far as to present a policy of low taxation as a silver bullet – a golden ticket to growth and prosperity! 

Bold claims indeed – but is it true?  What is the evidence? 

The search for evidence

How would we test the veracity of this concept?  It is not uncommon to see people quote anecdotal examples to support the contention.  But highlighting a particular instance where reduced tax has been followed by positive growth in a single country is potentially no more than a propaganda exercise.  What about the big picture?

There are many countries in the world.  Collectively they represent a wide variety of different economies and different tax regimes.  In a great many cases we have access to a lot of historic data on growth, tax policy and so on.  Surely it cannot be beyond the wit of man to compare tax policy to outcomes across many countries over time.  Can it?

This is not as simple as it sounds but it is possible.  The main problem is to make sure we compare apples with apples.

What is growth?

Firstly, we need to agree some kind of sensible definition of what we mean by ‘growth’.  At a simple level we might look at growth in terms of GDP.  However, GDP just tells us the total monetary value of an economy.  Growth in GDP is, of course, good.  However, it tells us very little about how wealthy people who live in that country are.  That is because it takes no account of population size.

Think of it this way:

  • 100 people living on an island earning $5k each per year,
  • So collectively they earn $500k in a year.
  • Only one person lives on the neighbouring island.  He earns $100k a year.
  • Which island is wealthier?

One island generates five times the money of the other.  However, clearly the guy living alone on the second island is wealthier.  For this reason, it is often better to look at per capita GDP (GDP per head of population) as a more accurate measure of wealth. 

Measuring taxation

It might seem like a simple thing to compare taxation between one economy and another until you come to try and do it.  It isn’t. 

If you think about it, any given country has a wide variety of different taxes and tax rates.  One might have high sales taxes and low income taxes.  Some might have forms of taxes that few other countries have.  In some countries individuals might pay limited personal tax but companies pay a lot (or vice versa). 

Hence, what we need to do is look at the overall tax burden when all these different elements are bundled up.  i.e., the proportion of wealth generated that is being taken in tax.

Oddities

In order to compare like with like we probably ought not to look at particularly odd or weird situations.  Ireland is a case in point.  So much so that Nobel Prize winning economist Paul Krugman labelled the phenomenon ‘Leprechaun economics’.  So, what happened?

In 2015, Apple changed the way it reported its accounts.  It shuffled a large chunk of revenue, previously reported elsewhere, into Ireland.  Now, suddenly, in a single quarter, Ireland’s national GDP jumped up 26%!  This had nothing to do with Ireland and everything to do with an Apple accounting policy change.

This distortion makes it very misleading to look at the Irish economy in the same way as other economies.

Of course, the biggest ‘oddity’ of all in recent years has been covid.  The pandemic has had a massive effect on global economies since it first struck in early 2020.  Attempting to measure the impact of tax policy on growth in the period after 2020 would therefore be very difficult to say the least.

Snapshot blindness

We often look at growth quarter by quarter or year on year.  That is fine but it is nevertheless potentially just a snapshot.  It can be distorted by unusual events that are unique to a particular country or year.  This can present a picture in a particular period that is very different from the underlying trend.

To measure the impact of taxation on growth we really need to be thinking in terms of longer-term impacts – performance over a longer period of time than just a year.  The sun coming out on one day does not a summer make.

Base effect

One of the biggest problems in measuring growth between different economies is known as ‘base effect’. 

So, what is base effect? 

Imagine the following scenario:

  • Brian earns $10k per year in his very first job.
  • After his first year, he gets a pay rise and a promotion.  He now earns $15k per year.
  • Brian’s salary has grown by 50%!
  • His friend’s mother Anne earns $200k per year.
  • Anne also gets a pay rise at the end of the year.  Her salary increases to $240k.
  • Her pay has only gone up by 20% but Brian’s has gone up by 50%!
  • So … is Brian doing better than Anne?

Of course not. 

This is a classic example of base effect.  It is the main reason why developing / emerging economies grow very fast compared to developed economies.  They are starting from a very small base!

If we are going to meaningfully compare economic performance, we need to be mindful of distortions like base effect.  Unfortunately, virtually all economies are of different sizes.  Nevertheless, for a meaningful comparison we ideally need to compare economies at a similar stage of economic development.

Data limitations

The reality is that more economic information is available for some countries than others and some report slightly differently.  The OECD strives to record comparable metrics for its member states and for several other key countries as far as is possible.

However, the fact remains that reasonably comparable information on tax and growth is not always available. 

This naturally places limitations on the extent to which we can meaningfully compare different countries.

Designing a test to measure the impact of tax

So, how might we go about attempting to measure the impact of tax policy on growth?  That, of course, sounds like a good title for an economics PhD thesis, which is not what we can realistically attempt in a short blog. 

Nevertheless, it is possible to look at some high-level measures for a basket of countries to see if we can observe any patterns over time.  So, with this in mind, let’s define our parameters:

  1. Time period: 2010-2019.  This gives us 10 years of data to look at that should capture trends over a reasonably long period.  It also has the merit of being the most recent period we can pick before covid starts to distort growth figures.
  2. We’ll measure the overall tax burden in comparison with growth in per capita GDP.
  3. To avoid the worst impacts of Base Effects, we’ll focus on a basket of developed economies (defined as having a per capita GDP in excess of $30k in 2010 at 2015 prices).
  4. This would potentially include Ireland, but due to the distortions unique to this country already mentioned, we will exclude them.

What tools can we use to find a pattern?

Let’s say we have data for 25 countries over 10 years.  It tells us, in each case, the tax burden and the growth experienced.  How do we know if there is a pattern, i.e., that they are inter-related in any way?

We have a couple of tests we can apply in the initial instance:

  1. Correlation
  2. Regression analysis

These tests measure slightly different things. You have probably heard of them and may have some familiarity with them.  However, perhaps you are one of the many people who is not entirely clear on the specific differences between the two.

What is correlation and how does it work?

Correlation is a statistical technique that measures the strength of the relationship between two sets of data.  It generates a number between -1 and +1 to indicate the strength of a relationship.  Technically we call this the coefficient (or simply ‘r’).

A positive number indicates that a pattern exists and that, as one number increases, the second number was also observed to increase.

A negative number indicates the reverse – that one number declines as the other increases.

A number close to 1 indicates a very strong relationship.  Close to 0 indicates a virtually non-existent relationship.

So, for example, we might compare number of ice cream sales to average temperature.  If we see a correlation of +0.8, this tells us that there is a strong relationship and that as temperature rises, ice cream sales also rise.

Correlation and causation

Correlation is not causation of course.  Correlation might tell us that ice cream sales rise when polar melt increases.  But that does not mean that buying ice cream causes the ice caps to melt!  In this example it just means that both are impacted by a third variable that we have failed to take into account – i.e. temperature.

In the case of what we’re trying to do here, a negative high correlation between tax burden and growth indicates a strong relationship between a high tax burden and poor growth.

As a general guide to the strength of a relationship we’d typically consider:

Correlation coefficientStrength of the relationship
1 or -1Perfect!
0.7 or -0.7Strong
0.5. or -0.5Moderate
0.3 or -0.3Weak
0None

What is regression analysis and how does it work?

Correlation seeks to measure the strength of a relationship but no more.  Regression analysis goes one step further.  It seeks to build a model to predict how one factor might change as a result of a change in another.

So, in this case, a regression analysis would seek to predict how an increase or decrease in the tax burden might impact growth.

Typically, regression produces two things.  The first is a formula that you can use to predict an outcome.  Hence, you can use a regression formula to tell you what growth you might expect if you set the tax burden at a particular level.

The second key output from a regression analysis is a measure of how reliably this formula can predict an outcome.  The technical term for this measure is ‘R2’ (not to be confused with the ‘r’ we use in correlation). Even more confusingly, also like correlation, that number can be between 0 and 1.  However it means something quite different.

If the number is 1, the equation is a strong fit to the data.  However, if the number is zero, the equation is pretty much junk.  So R2 simply tells us how well we can we predict growth rates based on the tax burden.

Comparing taxation levels with growth

In this analysis we compared a total of 25 OECD countries in the period 2010-2019.  We looked at the average overall tax burden in each case over the period and compared it to growth GDP per capita over the same period.  Ireland and countries with a GDP per capita under £30k were excluded.

The countries were:  Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Iceland, Israel, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Slovenia, South Korea, Spain, Sweden, Switzerland, UK, USA.

This results from this analysis are shown in the scatter plot below:

So, do high levels of tax impede growth?

The correlation between tax burden and growth rates experienced is -0.4.  This indicates there is a relationship between the two.  High tax levels do tend to correlate with weaker growth.  However, the relationship is moderate to weak.  We can see this clearly from the plot.  There are countries with a tax burden above 40% that experienced stronger growth than some with a tax burden under 30%.

In terms of regression, it is possible to plot a trend line that demonstrates how taxation in general might impact growth.  This indicates, for example, that an economy with a taxation level at around 25% might expect a growth of around 15% over ten years.  In contrast, the model suggests a tax rate at 45% might expect growth at only around half this level.  However, this model is a terrible fit, with an R2 of only 0.16!  We only need to compare the scatter plot to the trend line to see there are numerous exceptions to the rule.  There are plenty of examples of countries experiencing half or double the predicted growth at various different tax levels.

Conclusion

All this suggests that the tax burden only has a limited depressing effect on growth.  So an obsession with lowering taxes as a panacea remedy for delivering high growth is clearly naïve.  It is just one of several factors that need to be considered and, quite possibly, not even the most important.

Strong growth is clearly possible in countries with high levels of tax.  By the same token, having low tax rates does not guarantee strong growth by any means.

A more balanced view might be simply to say that tax has a limited depressive impact on growth.  For this reason, we could argue that it is better to keep it lower than higher.  But, by the same token, increasing the overall tax burden by 3% or even 4% would not necessarily depress growth.  Growth might even be stimulated if the additional revenues raised were invested wisely.

The idea that lowering tax is a silver bullet for stimulating growth is therefore unsupportable.

About Synchronix

Synchronix is a full-service market research consultancy.  We work with data to generate market insight to drive evidence-based decision making.

We specialise in serving b2b and niche consumer markets in Science, Engineering, Technology, Construction, Distribution, and Agriculture. Understanding and dealing with technical and industrial markets is our forte and this enables us to draw a greater depth of insight than non-specialist agencies.

Take a look at our website to find out more about our services.

Hands holding tablet and watching Youtube

The Visual Communications Age

The past few years has seen a boom in visual communications across social media.  An estimated 2.3 billion people now use YouTube every month.  Instagram and TikTok have around 1 billion monthly users each.

Visual social media of this kind – be it in the form of still images or video clips – are transforming the way in which we communicate.  Part of this change is simply a function of accessibility.  Technology has made it far easier for people to create visual images and make short video clips and mini films than ever was the case, even ten years ago.  And now there are more social media outlets than ever before where it is possible to publish such material.

It is incredible to think that twenty years ago Facebook, YouTube and Twitter did not even exist.  How much the world has changed!

However, we should not be tempted to think that social media platforms will continue to grow forever.  There is a finite limit to the number of users any platform can attract, after all.  Like in any other market, market growth will inevitably give way to market maturity at some point.

Platform maturity

Facebook’s owner Meta Platforms recently recorded a record daily loss on the stock market.  This came in the wake of the news that Facebook’s Daily Active Users fell to 1.929bn in the three months to the end of December. This compares to 1.930bn in the previous quarter.

This is the first time Facebook has experienced such a fall; a clear sign that this particular platform is reaching its mature phase.  Of course, it was bound to happen eventually.  After all, there are only so many active daily users you can have from a global population of 7.7 billion (some of whom do not have good internet access).

Rising Platforms

TikTok’s owner ByteDance, by contrast, saw revenues grow by 70% in 2021 (although even this is slower than the spectacular growth seen previously).

Facebook is primarily about written communication, albeit pictures, images and gifs are often shared on the platform.  TikTok is, of course, mainly about the short form video clip.  The BBC recently reported that Facebook’s owner has warned of pressures on revenues precisely because of stiffer competition from TikTok and YouTube.

Are these signs, therefore, of a wider trend?  Are we seeing a real sea-change in the way in which we communicate?  A transition from a culture of communication based on the written word to one where visual images and video become the dominant mode of interaction?

A visual future?

Are these portents of things to come?  Of a world where communication is primary achieved with the video clip and the streamed podcast?  Some would argue it is already happening, after all it is now quite easy for anyone to broadcast their own content on YouTube, TikTok or Twitch and it will only become easier with each passing year.  Now everyone is a content publisher.

There are also signs of generational differences.  Anecdotally we are hearing that younger people are more likely to engage with social media like TikTok and YouTube.  Social media such as Facebook, with its higher reliance on written content, still has an appeal for older generations but is, perhaps, less suited for a generation addicted to the video clip. 

But can we put any hard numbers to these claims?

Generational differences

A Synchronix survey from last year looked at social media use amongst gamers.  We wanted to understand the extent to which people of different ages engaged with social media to discuss or exchange information about gaming.  The results showed some clear generational differences in terms of preference.

Graph of gamer social media preferences by age

Platforms

YouTube: Emerges as the most popular social media platform for gamers under the age of 45.  Older gamers also engage with it extensively but, for the over 45s, is relegated to the number two spot. 

Instagram: is the second most popular media with the under 25s.  It is less popular with the 24-35 age group but still ranks 3rd overall.  Its popularity clearly diminishes with age, especially amongst the over 45s.

TikTok:  If anything, TikTok illustrates the most significant generational differences of all.  It is used by nearly 40% of the under 25s, placing it neck and neck with Instagram within this age group.  This drops to 26% amongst the 25-34’s (still significant).  However, its popularity wanes markedly in older age groups.

All three brands of visual based social media reflect the same overall pattern.  Their popularity is greatest in the youngest age groups and lowest amongst the over 45s.

Facebook:  Despite the recent slight dip in use, Facebook is popular with all ages.  However, it is not even one of the three most popular platforms for the under 25s, although this soon changes when we start to consider older age groups.  It is the second most popular platform for the 25-44 age group and the most popular with the over 45s.  Its higher reliance on written content lends it greater appeal for older audiences.

Twitter: Twitter is fourth most popular in the under 25s but drops in popularity with older age groups (especially the over 45s).  This is interesting as it shows that Twitter, which is primarily text based, demonstrates that written communications retain a certain degree of popularity with the younger generation.  The short form tweet, with its soundbite feel, is still able to resonate with generation Z in a way that other forms of written communication appear to struggle to do.

The future

One thing is now clear. Visual media has become critical for effectively communicating with Gen Z.  However, they are not entirely abandoning the written word.  Their preference for Twitter above Facebook is likely influenced by a texting culture in which short soundbites are strongly preferred to longer written posts.

The recent dip in Facebook usage likely reflects this generational behaviour shift.  However, the downtick in Facebook engagement should not be exaggerated.  The fact is that Facebook remains very popular amongst the over 25s and the most important social media for engaging with the over 45s.

As newer generations of internet users reach adulthood, it is likely that different generational preferences will become increasingly marked.  Marketeers will increasingly need to adapt strategies to employ a different mix of social media channels depending on the generation of customers they are aiming to communicate with.

So, a campaign aimed at the over 45s may need to focus more on Facebook, YouTube and WhatsApp.  However, a campaign aimed at a Gen Z audience would need to take very different approach, and would do better to focus mainly on Instagram, TikTok and YouTube.

Given the rapid pace of change we have experienced in the world of social media over the past decade, we can expect further significant changes over the next few years.  The next TikTok is likely to be a platform that facilitates video and/or audio interaction rather than something more reliant on the written word.   

As Gen Z comes of age and as younger generations follow, we will move to a culture highly dependent on streaming, video communication and visual interaction.  Perhaps we will eventually see this evolve into virtual reality driven experiences.  In fact, I’m sure this will happen at some point.  And although I suspect it is still a good way off, I would not be surprised if we found ourselves living in such a world twenty years from now.

About Us

Synchronix Research offers a full range market research services and market research training.  We can also provide technical content writing services.

You can read more about us on our website.  

You can catch up with our past blog articles here.

If you like to get in touch, please email us.

Sources

https://www.bbc.co.uk/news/business-60255088#

Playbook – UK Gaming Market Report 2021, Synchronix Research

https://www.un.org/en/global-issues/population

https://backlinko.com/instagram-users

https://backlinko.com/tiktok-users

https://www.globalmediainsight.com/blog/youtube-users-statistics/

https://www.reuters.com/markets/funds/exclusive-tiktok-owner-bytedances-revenue-growth-slowed-70-2021-sources-2022-01-20/


Forest fire as an example of climate change effects

Climate Change in 2021

The Latest IPCC Report

On 9th August, the IPCC released its latest report on climate change.  Based on a detailed assessment of the available scientific evidence, it concluded that we are virtually certain to see global warming of around 1.5oC over the next 20 years.

In the longer-term global warming could rise even further, potentially exceeding a 2oC increase by 2050.  And, if it does exceed 2oC, that is bad news.  At that level the report warns, “heat extremes would more often reach critical tolerance thresholds for agriculture and health”.  Indeed, under one possible scenario we might be seeing a rise of as much as 4.4oC by the end of the century.

The report warns:

“…unless there are immediate, rapid and large-scale reductions in greenhouse gas emissions, limiting warming to close to 1.5°C or even 2°C will be beyond reach.”

Who are the IPCC and why does this report matter?

The Intergovernmental Panel on Climate Change (IPCC) is the United Nations body for assessing the science related to climate change.  All 195 countries around the world support its work. Scientists from all around the world contribute to and assess its reports.

Every few years it publishes a detailed up-to-date assessment of where we stand.  The first report was published in 1992 and this latest report (August 2021) is the sixth.  As a result, its reports represent the most up-to-date, detailed and authoritative assessment of climate change available. 

The impact of global warming

Delving into the detail of the report reveals some rather frightening statistics that bring home just how significantly climate change is impacting our world:

  • In 2019, atmospheric CO2 concentrations were higher than at any time in at least the past 2 million years.
  • Global surface temperature has increased faster since 1970 than in any other 50-year period over at least the last 2000 years.
  • Global mean sea level has risen faster since 1900 than over any preceding century in at least the last 3000 years.

Over the past century, our world has experienced an average temperature rise of around 1oC.  We have only taken action to curb that increase relatively recently.

Where are we now?

Many nations have taken action to drive down CO2 emissions over the past two decades.  And, of course, the COVID pandemic temporarily forced a significant short-term reduction whilst much of the world was in lockdown.  So, we have made some progress.

Between 2000 and 2010, global CO2 emissions increased by just over 30%.  Between 2010 and 2019, emissions have continued to increase but, overall, at a much slower rate (10%).  Indeed, since around 2014/2015 the rate of increase has flattened significantly.

However, although CO2 emissions are no longer rising by much, they are not yet falling.  We are still a very long way from achieving anything approaching net zero.

What does the future hold?

Where we go from here will, of course, depend very much on what we do.  Do we take dramatic action now?  Do we aim for sharp and significant reductions in emissions and take the economic and financial pain that such action would surely demand? 

Or do we prioritise protecting the economy as far as possible and aim for much more gradual reductions? Depending on how fast (or how slowly) we act, the IPCC has calculated five possible scenarios.  Everything from a best-case scenario, based on what is likely to happen if we take drastic action fast.  Ranging through to a worst-case scenario, where CO2 levels continue to rise until late on in the century before finally seeing any reduction.

IPCC Climate Change Forecasts - 5 possible scenarios

Drastic Action

If we take drastic action now and achieve a global wide net zero for CO2 emissions by 2050 then the best-case scenario will apply.  However, so far, only 137 out of 195 countries have published a target of achieving net zero by 2050 (and even this is still under discussion in 72% of these countries).   Also, China (the world’s largest source of CO2 emissions) has set its net zero target for 2060, not 2050.

So, at present, the best-case scenario is unlikely.  Indeed, even under this scenario we are still almost certain to see a mean global temperature rise of 1.5oC relative to the average temperature of the world in the period 1850-1900.  It is now already too late to prevent that.

Given recent trends and current government targets around the world (and assuming those targets are all met), we are more likely to be looking at something similar to Scenario 2 or 3. 

In Scenario 2, we would need to see a more gradual but sustained reduction in emissions, achieving global net zero by around 2070 or 2075.  If we achieve that, we can just about avoid a temperature rise of 2oC.

Scenario 3 would assume a very limited/modest rise in CO2 emissions, gradually flattening as the century wore on, followed by a steady reduction in emissions from around 2060 onwards.  In this scenario we would not achieve net zero until the end of the century.  If this happened, we would see a rise of over 2oC by 2060, approaching a potentially catastrophic 3oC by the end of the century.

How will global warming affect us?

Depending on where you are in the world you are likely to experience different effects from global warming. 

Global warming has led to significant Artic ice melt but less significant melt in the Antarctic.  So it is not affecting us all equally.

However, places that have seen problems with extreme heatwaves leading to wildfires will see these events become increasingly common.  Places that have experienced more spells of torrential rain, leading to serious flash flooding will see such problems become a more frequent occurrence in future.

For northern Europe, global warming is likely to mean more heat waves in summer and fewer cold snaps in winter.  It will also mean more rain, especially in the winter, and more flash flooding following heavy downpours.  We can also expect to see more coastal flooding in those areas that have experienced such problems in the past twenty years or so.

For southern Europe and the Mediterranean region droughts, increased aridity and an increased incidence of wildfires in summer are very likely if global warming hits 2oC.  Agriculture in these areas is likely to become a lot tougher and the threat posed by wildfires will mean scenes like those in Greece in the summer of 2021 will become increasingly common.

Right now, we stand at a crossroads.  We can, if we so choose, act and limit the impact of global warming to something closer to that forecast in Scenario 1 or 2.  However, if we decide to act more slowly and opt to place short term economic and financial concerns before the longer-term environmental impacts, we may well be facing a serious crisis situation by the middle of the century.

In the light of this report, the decisions made at Cop26 this autumn will have a critical impact on our future. 

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

IPCC

Our world in data

Visualcapitalist

Thames Barrier

London Floods

Last Sunday London experienced serious flash floods following torrential downpours.  The London Fire Brigade received over 1000 flood related calls.  Two hospitals had to close for patient admissions.  Many roads and underground stations had to close, as did the Blackwell Tunnel.

But was this just a freak natural event or a symptom of global warming?  Is it a portent of things to come?

Global warming means heavier showers

It is difficult to specifically link these flash floods directly to global warming. 

However, a warmer climate will mean that showers, when they happen, will tend to be heavier over time.  According to the Grantham Institute, warmer air can hold more moisture.  That means that an increase in temperature of 1-1.5 degrees centigrade will lead to storms being about 10% stronger than they would otherwise have been.

Since 1880, global temperatures have warmed by a total of around 1oc but over the next century global warming looks like it will increase average temperatures by between 1.5oc and 5.5oc.  On that basis we can expect showers to become, typically, 10% – 50% heavier. 

So, London could be seeing a lot more flash floods by the end of the century.

Polar melt and rising seas

Climate change brings another threat to London beyond flash flooding from torrential rain.  A warmer climate is melting ice in the northern hemisphere, which is causing sea levels to rise.

London is built around the Thames Estuary and, for much of its history, it has served as a major port as well as the nation’s capital.  As sea levels rise, the danger of flooding from the Thames becomes more significant.

In the period 1971 to 2009, glacial melt is thought to have occurred at a rate of 226 gigatonnes per year.    Over the period 1971-2012 Arctic sea ice has been melting at a rate of 3.5 to 4.1% per decade.  Warming has also affected areas like Alaska and Siberia, melting permafrost over time.  Average temperatures in these places are thought to be on average 2-3oc higher now than they were back in 1971.

Of course, all this melting ice inevitably means more water in the oceans.  During the past centuries it is estimated that sea levels have risen by an average of 1.7mm per year.  It is also accelerating and by 2010 it was rising by over 3mm per year.

For a city that has always been vulnerable to flooding, like London, higher sea levels spell trouble ahead.

London’s Defences

The Thames Barrier represents London’s most prominent and important flood defence.  These gates can be shut to protect London from North Sea storm surges.   As sea levels rise London will need to rely on the barrier more and more and we can expect to see the gates being closed more frequently to prevent surges from flooding the capital.

Water levels in the Thames Estuary are estimated to have risen by around 15cm between 1911 and 2018.  So without the Thames Barrier, London would have experienced some significant floods over the past couple of decades.  It is estimated that around 16% of London properties lie within the flooding risk zone protected by the Barrier.

Since its construction in the early 80s the gates have been used increasingly over time.  So far, 2014 stands out as the most active year (during which it was raised/closed as many as 50 times).  During the past couple of decades the barrier has typically been needed about 7-8 times a year.

Graph of Thames Barrier gate closures

How long will the barrier hold?

The good news for Londoners is that the Thames Barrier is reasonably future proof.  It is likely to continue to protect London well until 2070, although the plan is to start looking for its replacement / upgrade in 2040.

Between 2035 and 2050 it is anticipated that London will need to improve flood defences such as raising flood walls and other smaller barriers and reshaping the riverside.

In terms of local conditions, it is estimated that London might expect 59% more rainfall by the end of the century.  By 2100, the water level in the Thames Estuary might be as much as 1 metre or more higher than it is today.  The proportion of London properties at risk will increase from 16% to 23% over that time and the Thames Barrier, as it is today, will not be able to protect Londoners any longer under those circumstances. 

In less than 20 years from now London will need to start thinking seriously about alternatives.

About Synchronix

Synchronix is a full-service market research agency.  We believe in using market research to help our clients understand how best to prepare for the future. 

You can read more about us on our website.  

If you wish to follow our weekly blog you can view all out past articles on our website here.

If you have any specific questions about our services, please contact us.

Sources

Earth.org

Environment Agency

Independent

IPCC

NASA

Understanding Change and the post-COVID Normal

There is little doubt that 2020 has brought considerable changes to our world.  Who could have predicted how dramatically COVID would have turned our world upside down at the start of 2020?

Hopefully, as 2021 begins, we can see some light at the end of the tunnel.  The new vaccines are starting to roll out (not a moment too soon) and perhaps we might dare hope for a return to normality during the spring.

But what will that normality look like?  Quite apart from the radical disruption to our social and working lives that COVID has wrought, it has quite likely accelerated and even inspired some long-term changes that will remain with us for years to come.

Remote working was forced on a large section of the working population for much of 2020.  By and large it worked.  Will office culture ever be the same again?  Or will the future of office work point towards an inexorable march toward the remote/virtual office.  The practical savings for office-based business are potentially huge – just think how much many businesses spend every year on prime location office space and business travel.  Imagine if you could slash that by cost by half or, perhaps, by even more than half.  Well, it turns out you probably can.  Tools and technologies that support the virtual office will become increasingly critical.  Who knows, in five or ten years from now we could all be holding international business meetings in VR simulated boardrooms.  In fact, I predict we will.

Many businesses have had to adapt to a world where trading online has, at times really been the only option.  Buying and selling at fixed locations and in-person has been hard hit.  Post COVID it will surely bounce back to some extent but the long-term trend to online retail has surely been greatly accelerated.  ONS figures showed that the % of UK retail business done online rose from around 16% in 2017 to 19% in 2019.  Without COVID we might have expected it to climb to around 21% for 2020 maybe.  However, the pandemic has meant the final 2020 figure is likely to end up closer to 26% or perhaps even a little higher.  

I’m sure people will want to return to the bricks and mortar shops to some degree once the pandemic is over – but online commerce has undeniably come of age and will, without question, form an increasingly critical part of any future marketing.  In future the look, feel and effectiveness of online sales and marketing will be just as important (and probably more so) than any in-person selling.

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