After the turmoil of the US Presidential election, we can now reflect on what Joe Biden’s victory could mean for us, here in the UK.
There are a number of factors that will make President-elect Biden’s economic strategy relevant on this side of the pond. The US is the world’s largest economy, so the policies it pursues inevitably impact other countries.
It should be noted that President Trump is refusing to accept defeat, saying that his legal team will begin mounting a challenge to the result on Monday.
The President-elect is a Brexit sceptic, believing the European Union to be one of the world’s premier trading blocs and consequently doubtful of the benefits of Britain’s leaving.
The UK has yet to agree a post-Brexit trade deal with the US, and the scope and detail of that deal could be significantly different under President Biden than it would have been under a second Trump administration.
Mr Trump openly expressed support for Britain’s departure from the EU.
It is possible the Biden administration might attach less importance to agreeing a deal with the UK than to bolstering the relationship between the US and the EU. The Biden administration will also want to protect and advance the interests of American exporters.
All we know for sure at this stage is that the change of incumbent in the White House is likely to push the signing of any Anglo-US trade accord further into the future.
Before the election, Mr Biden talked extensively about passing a stimulus package to galvanise the US domestic economy and support businesses and individuals to recover from the financial impact of coronavirus.
It remains to be seen whether he will encounter opposition to such plans from within the US’s parliamentary institutions, the House and the Senate, which retain strong Republican membership. That said, Republicans too have expressed support for stimulus proposals of their own.
Mr Biden’s enthusiasm for a tax-and-spend approach has been largely welcomed by global stock markets, which are hungry for positive economic activity.
Rising markets are good news for anyone with shareholdings – and for many of us here in the UK, that could mean money invested into an individual savings account or pension scheme.
Green for go?
The effects of a Biden presidency could create ripples for certain market sectors in the UK.
For example, during the election campaign, Mr Biden indicated that, if he were to take up office in January, one of his first executive acts would be to take the US back into the Paris Climate Agreement, reversing Donald Trump’s decision to withdraw.
This is in line with the Democratic party’s enthusiasm for investing in ‘green’ infrastructure and energy projects, which will benefit companies operating in that area.
That in turn might harm the fortunes of traditional energy companies operating in carbon-based fuel markets such as oil, natural gas and coal.
The US’s economic relationship with other countries will have an impact on the UK, beyond Brexit considerations.
For example, if the US were to implement trade barriers with the rest of the world and shift the emphasis to ‘Buy American’ in a bid to boost domestic production and manufacturing, then exporters based in other countries, including our own, could suffer.
Mr Biden has not indicated that he will pursue this kind of protectionist policy, but his overall approach may include measures which bolster the domestic economy, potentially at the expense of international trading partners.
Exchange for the better?
Another factor to take into account is currency exchange rates.
If the dollar rises in value relative to sterling, our exports would become cheaper for Americans, which could be a boon for UK firms struggling under the weight of coronavirus. But on the flipside, this could also mean we’d find ourselves paying more for US goods.
And then there’s holidays. They may seem a far-distant prospect at the moment, but if and when international travel once more becomes possible, a strong dollar would make visiting the US more expensive because our pounds sterling would not have the same buying power as previously.
But given the restrictions we have all endured of late, the US-lovers among us might consider it a price well worth paying.