Despite the confidence of the pollsters, the unimaginable has become reality; Donald J Trump has been elected President of the United States. It goes without saying that the US Presidential election result is not as seismic as Brexit, not just for British audiences but also globally. Although Trump was an outsider, in practice this is just the changing of the guard within an established political order (although an unusual one). Brexit was tearing up decades of certainty re British foreign and economic policy overnight. It is also important to stress that even a President Trump cannot do what he likes. Congress (although likely to be Republican controlled) will have its own ideas and the Democrats will still be trying to make mischief as well. But here are some quick takeaways for UK charities based on this morning’s result:
Expect economic uncertainty
Markets around the world are yoyo-ing up and down at the time of writing (although they don’t seem to have taken the hit that was feared in the early hours of the morning), but most charities invest for the long term and will have weighted their portfolios for risk. As a consequence, the short-term economic uncertainty shouldn’t significantly impact the sector. However Trump is unpredictable and he is just as likely to frighten markets as he is to reassure them. So charities will need to keep on top of the latest economic and political information and make sure that they are steering their charity through potentially bumpy economic waters. Taking advice from investment managers would be wise, and charities working overseas will need to seek advice to see how they can manage potential currency volatility. Most advisors will be crunching the numbers and preparing briefings as we speak, so make sure you get your money’s worth! Over the long term, it is far harder to predict. Some banks, like HSBC, are already predicting recession in the next few years – but the truth is anyone’s guess presently.
UK not looking as isolated as it was
This isn’t a point about Brexit, but rather that Trump has been very favourable to the UK in his election campaign (despite general apathy towards him on this side of the pond). He has said that he would put the UK ‘at the front of the queue’ for a trade deal. We will see whether ‘anti-free trade’ Trump translates that into practice. However, for investors worried about the UK’s economic position, having a ‘friendly’ US President that apparently wants to reward the UK’s Brexit decision may make businesses a little more well-disposed to the UK. Of course, this is only speculation but a potential silver lining.
Western societies divided?
The US looks incredibly divided currently, although regular US election watchers will be familiar with the comments made after every presidential election in recent memory that there needs to be ‘healing’. Any election which involves a straight choice between two candidates is going to look pretty stark. That being said, everyone agrees that there has never been an election where there has been quite as much vitriol on both sides, with so many voters not prepared to accept their candidate’s opponent as the victor. In the UK, a lot of people are at present disillusioned with the political process. But this is an opportunity as well as for charities to channel that disillusionment into something constructive. It is the job of charities and wider civil society to do that. For those that have welcomed trends such as Brexit and Trump’s victory, there is a clear desire for change and again it will be up to civil society and charities to respond to this.
CFG will be following the impact of the election closely and will update this blog and others with any relevant news, but for now, we all have to hold tight.
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