The world held its breath in anticipation as Donald Trump was announced as the next American president this week. So what might his presidency mean for small businesses in the UK?
America is a market that matters to Britain’s businesses. We export £30bn worth of goods and services to the US. That’s a little ahead of what we sell to Germany and about four times what the UK sends to China.
President Obama said that Britain would be “at the back of the queue” for a post Brexit trade deal, however, despite not promoting our country to the front of queue, President-elect Trump has said Britain would not be at the back and stated that Brexit would make no difference in his mind.
It’s worth noting that Trump’s general attitude to free trade deals is hostile and with his “America first” policy he’s unlikely to go out of his way to do the UK any favours. He has called the North American Free Trade Agreement which linked the American, Mexican and Canadian economies “the worst deal ever”. However, it’s unclear whether a UK-US deal would actually be favoured by a Trump administration despite Prime Minister Theresa May congratulating Trump and stating:
“Britain and the United States have an enduring and special relationship based on the values of freedom, democracy and enterprise.
“We are, and will remain, strong and close partners on trade, security and defence.”
It’s anticipated that a Trump presidency might not be as painful for the UK as for other European currencies. The reason for this is that the post-Brexit plunge in the pound has actually heightened Britain’s competitiveness. The drop in the Dollar may make the pound more attractive on the currency markets and that confidence, can drive investment back into UK.
As of now, sterling is up against the dollar. This is good news for British small businesses and sole traders as fuel prices set to go down, after a six month high.
There’s no doubt that, as with any political upheaval, the markets will suffer for the short term with the main impact of this being availability of funding for startups and small businesses.
Brexit has already made this a difficult playing field and Trump’s appointment will only fuel the uncertainty. What’s an already competitive and challenging arena could become even more difficult in the short term.
Tourism and investment
It might be difficult to get a round of golf at Donald Trump’s Scottish course now the networking opportunities are through the roof that’s for sure! Who knows, with his Scottish heritage and recent form, Trump may even decide to invest more in Scotland. That aside, his plan for tax reform could mean Americans have more cash to spend on British goods and holidays in the UK.
It’s early days and the full implications of a US governed by President-elect Trump are yet to be felt however, UK businesses need to start thinking about how they’ll make the pennies, euros and cents add up.