Trump unleashes animal spirits to boost US: but British businesses face ‘slow death’ under Labor

Donald Trump has unleashed ‘animal spirits’ in America, while businesses in Britain face a ‘slow death’ after Labour’s tax hikes, business leaders have warned.

As US stock markets hover near record highs, City tycoon Sir Martin Sorrell said the president-elect has boosted business morale across the Atlantic.

And Goldman Sachs CEO David Solomon welcomed the prospect of “a more incremental kind of playbook” from the new administration.

By contrast, business sentiment in Britain has plummeted after Rachel Reeves used her first budget as chancellor to announce £40 billion in tax increases.

Insolvency expert Ric Traynor, boss of restructuring group Begbies Traynor, yesterday warned of a wave of British company bankruptcies in the coming months as companies suffer from the tax raid.

The comments underlined the stark difference in mood in the US and Britain following Trump’s election victory and Labor’s budget.

The political and economic turmoil in Europe – with Germany and France in crisis and the plummeting euro – have further exposed the transatlantic divide.

Julian Jessop, economics researcher at think tank the Institute for Economic Affairs, said: ‘Trump and his new team have real business experience and can sell a compelling story about the economy.

‘The contrast with Keir Starmer and the new government in Britain could hardly be greater.

“Labor ministers have spent most of the year talking about the economy and seemingly doing their best to undermine the confidence of households, businesses and investors.”

Trump has promised to cut taxes for businesses and individuals and cut red tape.

But Ashley Alder, chairman of Britain’s Financial Conduct Authority, warned of the “obvious dangers” of a regulatory “race to the bottom” with Trump.

And his threat of tariffs on goods from China, Mexico, Canada and Europe has raised fears of a damaging global trade war.

However, some observers believe this rhetoric is a negotiating tactic to secure a better deal for the US when he returns to the White House.

Jenny Johnson, CEO of Franklin Templeton Investments, said: “Trump is a dealmaker. The US needs China – and China needs the US.”

Corporate America was on fire at the start of this week on so-called ‘Merger Monday’, as US companies agreed almost £30 billion in deals – including the mega-merger of advertising giants Omnicom and Interpublic.

Sorrell, 79, executive chairman of digital advertising group S4 Capital after previously making WPP the world’s largest advertising company, pointed to a change in mood since Trump’s election victory.

“In the second Trump era, we are seeing a huge increase in what I call ‘animal spirits’ in America,” he told the BBC.

‘The sense of deregulation that Trump is generating means that deals and the North American market are big and strong. Deal mania is on the rise.”

Goldman CEO Solomon said: “If you were to talk to corporate America CEOs, they would say the regulatory environment has been holding back growth and investment in recent years.

And it looks like we’re going to turn that pendulum back a bit. Most CEOs I talk to, when I talk to our clients, are excited about the prospect of getting that swing back.”

But experts fear many businesses in Britain will struggle to survive Labour’s tax rises.

Traynor warned that some could face a ‘slow death’ over the next six months as a result of the £25 billion increase in employers’ national insurance contributions.

He added: ‘The number of bankruptcies in Britain remains at a high level. Businesses are facing continued demand pressures and cost challenges, including the recent increase in costs due to the Budget.”