Donald Trump’s recent victory in the US Presidential election has sent shockwaves across the globe, and the impacts could be felt even in the UK. The geopolitical implications of Trump’s win are expected to have far-reaching effects, potentially affecting personal finances, particularly in areas such as mortgages and interest rates.
Economists are warning that Trump’s policies, including higher import tariffs and restricted immigration, could lead to a reduced US Gross Domestic Product (GDP) and increased inflation. This could result in the US Federal Reserve’s funds rate being 0.5 percentage points higher under Trump’s presidency. Such a scenario would likely put upward pressure on UK gilt yields and could lead to slightly higher mortgage rates for UK households.
Furthermore, the Bank of England may be forced to make reduced rate cuts in response to a more inflationary global environment, which could translate to sustained higher mortgage rates domestically. Investment bank Peel Hunt has highlighted the potential impacts of the US election on UK stock markets and companies, which could affect individuals who own shares directly or through investments like ISAs or pensions.
Peel Hunt suggests that both Trump and his opponent’s policies could have anti-growth measures that may impair US economic performance, affecting global financial markets. The potential fallout from negatively impacted companies could also have repercussions on jobs and wages in the UK. Trump’s proposed tariffs on imported goods to the US could have a significant impact on companies with high exposure to the US market, such as Games Workshop and Fevertree.
Games Workshop, with 40% of its sales coming from the US, could face increased costs due to tariffs, while Fevertree, which generates 32% of its revenue from the US, may also be impacted by import tariffs. Similarly, companies in the transportation sector, like British Airways owner IAG and airlines such as Ryanair and Wizz Air, could face challenges if tariffs are imposed on imports.
In addition to tariffs, Trump’s victory could influence global economic growth and energy policies, with potential implications for sectors like oil and gas. The ramifications of the US election could be widespread, with implications for various industries and economies around the world. As the situation continues to evolve, it is essential for individuals and businesses to stay informed and prepared for potential changes that could impact their financial wellbeing.