Trump’s presidency will undoubtedly set the American economy alight. His predecessor has presided over subdued growth that has been attenuated by suffocating regulation, high corporate taxation and ‘big government’ which is why growth in the USA is presently 2% and not more, despite an unprecedented amount of Quantitative Easing.
Trump, on the other hand, has promised to reflate the US Economy, by increased borrowings, more infrastructure spending, less regulation, lower corporate and personal tax and smaller government. This will undoubtedly mean that growth will be boosted and it is likely that his pre-election predications of 4% could well be met by all these measures.
The Dollar will strengthen, particularly if Interest Rates rise, to keep down inflation in the US, which will mean that American investors will have more buying power with their currency to purchase property/companies in the UK.
Lower corporate taxation will undoubtedly boost the US Stock Market and this will have an upward stimulus on our own FTSE Index, where it is intrinsically linked, and this should have a positive ‘knock on’ effect on the UK economy (75% of publically listed companies have their earnings connected with the Dollar).
The Chinese are the biggest debtors of the US and, as the Dollar rises against the Pound, they will have even more buying power for UK property than they do presently, where they enjoy a circa 20% currency windfall from the Brexit effect.
If Trump is successful in ‘taming’ Putin and as a result sanctions against Russia are eased or dropped, Russian buyers will be able to extract their money from their homeland to return to buying property in the UK as they have done in the past. 50% of Prime Central London’s residential property, at one time, were bought by Russians and recently we’ve seen ‘neither hide nor hair’ of them. This sector of the Property Market is in the doldrums with values down by 35% from the highs in 2014 as a direct result of the draconian Stamp Duty changes of our previous Chancellor, and this stimulus would be very welcome to the Residential Property Market.
Whilst Trump may have an odious demeanour, with his bombastic, inarticulate style, he nevertheless is a committed anglophile and has promised to organise a quick trade deal with the UK, that will have a galvanising and catalytic effect on other countries trading with us in the post Brexit era. This may even positively affect the highly complex negotiations with our European partners to help extricate ourselves, efficiently, from the EU whilst still maintaining tariff free trading arrangements.
Even before President Trump’s inauguration, you could see a strong UK/USA axis, working to good effect in regard to the feeble attempts by the French to organise the proposed peace accord in the Middle East, where representatives of both sides of this intractable problem, were conspicuously absent.
Whilst the EU languishes with high unemployment, low growth and sluggish economies, the UK and USA have emerged revitalised from the Credit Crunch of 2008 and it is, therefore, appropriate that our economic and political aspirations are now perfectly aligned and will produce some good results. This is in sharp contrast to former President Obama, and his isolationist view of the world, which has substantially devalued ‘brand USA’.
The word is out amongst US international investors, or any other country that is Dollar denominated, that UK property, corporate assets, are cheap and that the British economy is proving remarkably resilient, defying the apocalyptic predictions by economic forecasters after Brexit and this must bode well for us.
President Trump will be good for Britain.