Business owners may be feeling that someone, somewhere has it in for them. First there was the Scottish election, which, while ultimately a vote for the status quo, was much closer than many pollsters anticipated. Then there was Brexit and with it the prospect of a second Scottish referendum. Now there is Trump preparing to enter the White House. It’s therefore quite understandable that many business owners will be feeling jittery about their future prospects. Here at TPP we generally stay out of politics; however, we’ll take a quick look at each of these events and explain why we’re still feeling positive about the future.
The Scottish Referendum
The Scottish independence debate is very far from over, but while Scottish independence would probably have massive emotional resonance, it’s questionable how much practical difference it would make. Scotland already has its own parliament, legal system and education system, meaning that, in practical terms, it already has a high degree of independence. It also shares a lot of common history with other parts of the UK, meaning that it would have compelling emotional reasons to wish to stay on good terms with its bigger neighbour as well as commercial ones. History is full of examples of countries splitting apart but still getting on reasonably to very well overall. The Republic of Ireland was once part of the UK, as were the U.S.A, Canada, Australia and New Zealand. In other words, Scotland may indeed go independent, but it’s highly unlikely to be hostile to the only country with which it shares a land border.
Access to the free market has been a huge topic since the referendum was announced and will presumably continue to make headlines until the issue is finally settled. While it’s true to say that Euro transactions must be processed within the single market area, which could mean that some financial services jobs have to be relocated, it’s worth remembering that, commercially-speaking, the UK in general and London in particular, offer a number of reasons for businesses to be here, particularly compared to the EU countries which are now touting for their custom. In particular the UK offers more flexibility in employment than many other countries in the world and certainly Europe. It also tends to be more accepting of “disruptive” businesses and business models. In France, for example, the mayor of Paris is threatening legal action against Amazon for bringing its one-hour delivery service to the French capital and Uber has already faced a number of legal struggles there. Are companies really going to relocate to countries, which only want the jobs and tax they bring but do not wish to allow them to operate their actual business within their borders?
Newspaper headlines report that Trump’s victory sent the dollar plunging and the financial markets into a tailspin. As is so often the case with newspaper headlines, the reality is a bit more complex. First of all, it’s worth remembering that markets generally dislike surprises. Secondly, it’s worth noting that, generally, the markets are already recovering. The dollar is currently back more-or-less where it was and, overall, stocks are gaining. Trump’s first move was to make a very gracious and conciliatory victory speech and he seems to be eager to move on from the aggressive nature of the campaign trail. While Trump has built his reputation on being prepared to thumb his nose at the establishment, he is going to need at least some degree of support from his party if not the Democrats. His economic policy, while controversial, is not as insane as some of his opponents have made out. It essentially amounts to “cut taxes and increase spending on infrastructure to stimulate the economy”. Given that certain areas of the U.S.’ infrastructure could definitely use some improvement anyway, there has to be at least some level of benefit to this policy. For now it’s a case of “wait and see” so we’re keeping calm and carrying on.