USA (Washington Insider Magazine) – Despite the current political turmoil in the US and UK, the US economy and stock market are expected to remain stable, regardless of the presidential election outcome. Experts at a recent event in London conveyed a positive outlook for investors, emphasizing that economic fundamentals remain strong.
US Politics: Unprecedented Challenges
Charles Myers, chairman of Signum Global Advisors, highlighted the extraordinary political situation in the US. With rising demands for President Joe Biden to step aside for a younger candidate, the political landscape is shifting rapidly. Myers pointed out this situation as unprecedented in American history, pointing to the Democratic party’s internal conflicts.
Democratic Party’s Dilemma
According to Pwmnet, Myers described the Democratic party’s strategy to revitalize Biden’s campaign by focusing on swing states and media appearances. Despite Biden’s struggles, Myers believes Vice President Kamala Harris could be a strong contender, appealing to key voter demographics such as women, black voters, and young people.
Strong Economic Indicators
According to Myers, the US economy is set to continue its growth trajectory, driven by four key factors: the $1.6tn fiscal stimulus kick-started by the Inflation Reduction Act; inward FDI flows of 10 to 15 per cent above the historical average; a technology boom where “every major AI company is based in the US”, and a “weak China”, which leaves the US looking much more attractive for economic growth and FDI.
Potential Impact of a Trump Presidency
A potential second term for Donald Trump could improve US-UK relations, possibly leading to a trade deal. However, it might also lead to renewed trade tensions with the EU and a shift in US policy towards Ukraine and Russia. Myers predicts that under Trump, a quick resolution with Russia could be reached, impacting European stability and reconstruction efforts in Ukraine.
UK Political Landscape: Limited Flexibility
Kay Swinburne, a former Brussels lawmaker, observed that both the UK Conservative and Labour parties have limited room to maneuver in addressing economic challenges. Continued engagement with the financial sector, particularly private equity, is considered as crucial for economic recovery.
UK-EU Relations: Low Priority
Swinburne emphasized that renegotiating Brexit agreements is not a priority for EU countries, which are more focused on internal issues. Despite this, the normalization of regulatory dialogue between Brussels and London is seen as a positive development for UK businesses.
Conclusion
Overall, while political instability poses challenges, both US and UK economies are expected to remain resilient. Investors are advised to stay positive, as underlying economic strengths and strategic engagements continue to support growth.
