Stormy times ahead for investors, with Britain now seen as an oasis of political stability: RUTH SUNDERLAND
Could the stormy weather that ushered in the new year be a bad omen for 2025? Let’s hope not.
But I’m not the only one who looks to the next twelve months with great trepidation.
The post-war world order in the West looks increasingly unstable as free trade and centrist politics are threatened by a wave of populism.
The biggest event we already know is Donald Trump’s return to the White House: on January 20, he will be officially sworn in for his second term.
To state the obvious, this will have huge consequences for Britain, politically and economically.
If Trump follows through on his threat to impose tariffs on U.S. imports, it would threaten the decades-long trend toward free trade and globalization.
Instability: The post-war world order in the West looks increasingly unstable as free trade and centrist politics are threatened by a wave of populism
Some economists argue that Britain will not be on the front line of the affected countries, but still. Our chances of a good trade deal are not improved by the divided relations between elements of the Labor government and the new Trump administration.
This predictably leads to calls to ‘reset’ – to use the chancellor’s word – our relationship with the EU, a euphemism for trying to undo Brexit.
It’s easy to imagine Britain caught between a Trump White House and an attempt to appease EU leaders.
Who would have confidence in this government’s ability to walk such a tightrope? Not me. Standing next to Trump is Elon Musk, a figure as alarming as he is fascinating.
In Britain, Nigel Farage has claimed ‘political support’ from Musk and there is speculation that the Tesla billionaire could find a way to get money back.
He has thrown a grenade into German politics by writing an article in support of the far-right Alternative for Germany ahead of elections there in February.
The German economy, once a mighty engine, is in poor shape and vulnerable in a new Trumpian world order due to its dependence on exports in general and the auto industry in particular.
Germany has been slow to embrace technology and AI, and is particularly vulnerable on the energy front due to Angela Merkel’s decision to shun nuclear power in the wake of the 2011 Fukushima disaster.
Few in France could not be inspired by the reopening of Notre-Dame, five years after the terrible fire. Neither that nor the Paris Olympics can disguise the fact that 2024 was a terrible year across the Channel and this year could be even worse.
The attempts by former Prime Minister Michel Barnier – best known in Britain as the EU’s chief Brexit negotiator – to implement 60 billion euros in tax increases and spending cuts resulted in a vote of no confidence and the first collapse of a French government for more than sixty years.
President Macron’s chances of serving out his term until 2027 rest with his new Prime Minister, François Bayrou, who will have to convince both left and right not to overthrow the government.
Marine Le Pen of the far-right National Rally party, who together with leftist Jean-Luc Melenchon toppled Barnier, faces a verdict in an embezzlement case in March.
Prosecutors have sought a five-year prison sentence and a five-year ban from running for public office, though this could backfire and make her a martyr.
Perhaps it is not surprising that some major investors see Britain – relatively speaking – as an oasis of political stability.
Happy new year.
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