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Will the new president trump the downside of brexit?

If 2016 seemed a remarkable year then we may well come to realise it was just the warm up act for 2017.

The week that Donald Trump was inaugurated as the 45th President of the United States of America was also the week that Theresa May set out the government’s (hard) Brexit negotiation objectives as we spiral down to the event horizon of the triggering of article 50 in March.

It really does not matter what your personal view on Brexit is, whether you are a MP, an economist, a business owner, a market trader wanting to sell carrots in pounds, or a complete Europhile, the issue is the same. We do not know what is really on the other side of Brexit. We do not know how long the negotiations will really take and what the outcomes will be. We have no idea how many unintended consequences or accidental benefits there will be. Anyone who claims they know is lying, because there is no way of knowing.

With Brexit we are creating a new situation where trade with our largest export market is made more difficult in order to make trade easier with other markets further away. Of course the total sum of the additional trade can add up to more than the European trade, but in truth these markets have always been there for us and we have not always done as well as we might in them.

But that was then and this is now and we now have the added spice of a new US President in place. Donald Trump has been making some radical assertions during the election campaign and in a recent interview with The Times implied that a deal with the UK could be pulled together quickly.

This may be the case, but it may still have to wait until at least 2019 to get it working and he has been pretty clear that he will want all new deals to clearly benefit the USA. The USA has an economy more than 6 times that of the UK. Who do you think will have the most to gain from any deal and therefore the weakest negotiating position? We need some kind of leverage to make this deal interesting for the USA – so we do not just get trodden on.

Details of any future deals aside, the opportunities for the UK cannot wait for trade deals. They take too long to get in place and the world is changing too fast now for us to have to wait. The bad stuff will happen before any prospect of serious good stuff – we need to bring the good stuff forward if we can.

The Mid Atlantic Bridge

One very strong negotiating card the UK has yet to bring into play is a potential favoured position with a new US regime which has a problem with Europe. In other words, as relations might sour between the US and Europe and the UK moves away from Europe (but hopefully not too far), being a bridge between the two may prove to be a lucrative and powerful position to be in.

The mid atlantic bridge

Ever since the end of the Second World War, The USA has acted like a benevolent (and indulgent) rich uncle gently encouraging Europe in its aspirations to be a rival economic power. The deal is of course that a stable and interdependent Europe is not one fighting with itself all of the time and triggering troublesome world wars.

It is now 2017 and so an argument that Europe should have grown up enough to stop perpetually fighting, is in fact reasonable. And this is of course the Trump assertion. The rich uncle is a lot less rich than he used to be and the unruly children are now old enough to look after themselves – surely?

Yes, this is a reasonable assertion, but the reality may not fit. Europe is collapsing under the strain of uncontrolled migration, low growth, a resistance to the required financial integration in the Eurozone and Brexit. The latter can of course not be seen to be too successful – as everyone will want out.

Trump seems not to care. Europe’s problems are its own, not a matter for the USA he seems to be saying. However, it might be helpful for a trusted ally to be in place to assist with some discrete backtracking when the reality of a fragmenting Europe on the borders of a resurgent Russia suddenly dawns.

The UK will be very shortly be in a perfect position ‘geographically’ and ‘politically’ to fill this role. It should be a short step from there to add ‘commercially’ to the list.

It is likely that the Trump administration will want to kill off the proposed Transatlantic Trade and Investment Partnership (TTIP) with the EU – he has said as much. This surely can be another building component of the bridge.

What will the solution look like and what will the details be? Only time will tell, but one thing that is certain is that it will bring many new opportunities if it comes to pass.

Actually, if this possible new situation proves to be the case then a Brexit vote may come to seem historically as remarkable foresight – how did all of those Brits know?

Place your bets NOW!

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