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What a week!

ne_111116Donald trumps Hillary  In a result which may yet prove to have deeper impacts on the UK economy than Brexit, Donald Trump has beaten the odds to become US President. To have a Republican candidate win following a Democratic turn in office is no great surprise in two-party America. However, the White House now welcomes a man into the most powerful position in the world, who has no previous political experience and who promises to build a wall between the US and Mexico. The United States does not shy away from surprising political decisions; lest we forget, actor turned two-term President Ronald Reagan was considered by many to be unsuitable at the point of his election. However, the Trump victory is surely a radical appointment and has the potential to herald a significant shift in the global order. Combining a headstrong Republican President with the backing of a Republican Senate is a recipe for change.

There are echos of Brexit in this surprise vote for populism and a change to the status quo. These are perhaps symptomatic of a wider global movement, fueled by disenfranchisement and increasing inequality in Western economies.  Others around the world need to take note, and not fall into the trap of complacency in European elections next year.

The immediate (but modest) rally of the pound against the dollar may be welcomed by some, who will also remember Trump’s comment that the UK ‘will not be back of the queue’ for a trade deal with the US. As at close of business, the world equities markets seem to agree, with investors generally not pricing in any prospect of greater global instability – but as with the Brexit vote, we are at the start of a longer journey.

Click here for my colleague Elisabeth Troni’s perspective on the potential impacts of this result on UK and European real estate.

Brexit cancelled?  No, in all probability not. The High Court ruling preventing Theresa May from invoking Article 50 certainty wasn’t in the script, but will the Commons and the Lords really vote against the will of the people? However, if the decision is upheld in the Supreme Court, there will be Parliamentary scrutiny, which at the least has the potential to slow down the process of exit and may perhaps push negotiations towards a softer Brexit. Sterling responded positively, rising 3% during last week after the decision was announced. The bookies’ implied probability of holding a General Election prior to 2020 remains low at 17%.

Come fly with me  Manchester Airport has announced its first non-stop flight to Singapore and a new direct flight to Houston. Meanwhile last Friday Peel Ports officially opened a new deepwater port in Liverpool that can handle approximately one million containers per annum. Following the Heathrow announcement, the race is on for the UK’s regional cities to mark themselves out as open for global business in a post-Brexit environment. Securing and augmenting these international links will be essential for local economies and property markets, as the UK seeks to establish new global trade deals.

Buy British  With import costs rising, will Brexit catalyse the production and sale of British goods in the UK? Tim Martin, Chair of JD Wetherspoon thinks so, saying “I don’t think Wetherspoon or British buyers are in a weak position because we can switch from Swedish cider to British cider.” The UK is 76% self-sufficient and a survey by the Department for Environment, Food & Rural Affairs earlier this year suggests that 38% of people are prepared to pay more for British food in any event.

New Europe email

Richard Pickering, Head of UK Research & Insight

Richard Pickering, Head of UK Research & Insight.

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