By Jonathan Sloan

AS the nights start to draw in it is quite natural to start reflecting on the year that was before our attention turns to the festive period and the incoming New Year.

Any analysis which we might attempt is, in many ways, flawed by the human desire to put events into “neat boxes” to help us either affirm or disprove our pre-existing theories. We have even invented a number of terms to describe this – “echo chambers” and “confirmation bias” among them – and we often end up reconfirming an existing viewpoint.

But the role of any good adviser is to dispassionately analyse the facts in front of us, as I look to do so here.

The current set of economic facts is following a familiar pattern of confirmation and conflict with present economic thinking. We have seen the world adjust to not only higher interest rates, but the move of artificial intelligence (AI) and its likely or possible impact on the human race and global economy into the mainstream conversation. Big issues which require some deep reflection and some futuristic forecasting which is steeped in a fair amount of humility.

Jonathan Sloan: Uncertainty over inflation and interest rates means investors face tough choices

History tells us that it often repeats itself, but the changes in the inter-connectedness of the global economy today mean that many of the typical models we use to analyse the data are oftentimes defunct.

Take as an example the fact that over the last 12 months, we have seen interest rates in the larger economies (US, Europe, UK) increase at a rate not thought possible by many a mere 18 months ago. And yet despite that, we continue to see strong economic data, especially from the US, which shows a resilient labour market and an economy that certainly doesn’t seem to be teetering on the edge of recession just yet.

Closer to home in the UK and we see similar, if less dramatic, patterns. Rising interest rates and more sluggish growth than our US counterparts, but a buoyant labour market and a discretionary consumer spending power which has been redirected but is still in operation (try getting a table in a restaurant on any Saturday night).

That is not to say that the impacts of inflation, rising costs and labour insecurity are not disproportionately affecting parts of our society – those at the lower end of the income stream especially. However, as a whole, the economy is holding firm. The data analysis from 50 years ago is proving pretty useless in determining what might come next in the same way that it was in predicting where we are today.

Right now, the message for investors is roughly the same even in the face of all this uncertainty. The introduction of new technology, AI, is more likely than not a net positive for the global economy over time. And while some analysts might be overly bullish on what the impact of this may be, there is an equal number of those who are very likely undervaluing the impact it will have.

We cannot escape the fact that the economic turbulence of the last year may be terrible for many, but we should also continue to remember that we have an uncanny ability to re-invent and prosper. As our chief investment officer, Will Hobbs, said recently: “All in all, we are better off treating the outlook for the global economy as innocent until proved guilty, rather than the reverse.”

So, in conclusion, the review of the year that was is not very likely to tell us much about the next year that will come. Perhaps we would be well advised that although myriad potential futures might exist, it would be a mistake to write off the robustness of the global economy and mankind’s innate desire to thrive.

Jonathan Sloan is regional director, Scotland at Barclays Wealth and Investment Management