The Special Relationship
Historically the US and the UK have had a close relationship, becoming particularly close in the Reagan/Thatcher years. The UK economy will be undoubtably affected by the results this week, particularly the trade deals that we’ve relied heavily on post-Brexit. If the new president were to create harsher trade costs for importers, that would have a knock on affect to UK businesses that ship goods to the States.
We often hear people referring to ‘the markets’ but what are they actually and how are they affected by elections?
Exchange rates – the value of the dollar relative to the pound is always affected by political changes. If the dollar gets strong it’s possible that UK exports may become more competitive, but if it gets weaker UK businesses may see reduced profitability.
Tariffs and Trade – these will be intrinsically impacted by the results of the elections, whether that be through higher tariffs on UK goods or trade agreements allowing a smoother flow of products and services across the Atlantic.
Financial Markets – stock markets, traders and investment will all be affected by the decision of the US public. Things like interest rates, tax policies, and regulations create ripples throughout the US markets, which inevitably affect the UK and the EU.
Policies – climate policy is a hotly debated topic, which potentially will have a large impact on our manufacturing industry.
One thing remains clear, that financial markets do not like uncertainty, so the sooner there is a decision the better when it comes to the stability of the economy!
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