February Question of the Month: How do you think new US policies will have an impact on business and jobs in the UK?
Our question of the month in February took a look at the US-UK political landscape for 2017 and the results are in!
The significant majority at 56% said that new US policies will have a negative impact for the UK. However, it wasn't a clear cut issue with 29% saying it could even be positive, 3% no impact at all and 12% unsure.
The response from our network parallels those of top international economists who came to a similarly unsure result in a recent Financial Times survey. So what are the key comments in the debate?
New US policies will have NEGATIVE impact on UK business and jobs because...
Bad US publicity reflects badly on the UK
Although the UK has a strong link with the huge US market, the current bad publicity that the new administration has received, particularly in relation to the controversial executive order travel bans, could damage the UK's reputation with other trading nations.
Potential US de-regulation will not be good for UK
There have been signals that the new administration is seeking large scale de-regulation across America which could cause big problems for UK businesses. The UK will become a less competitive trading partner if we still maintain a lot of red tape post Brexit and our financial edge in American markets could be weakened.
Protectionism will cause problems for European corporates
President Trump has been keen to promote US interests both at home and abroad and has signalled protectionist style policies will be implemented. This means a focus on internal domestic policy which may harm the international market. The fact that the US is looking inward for localised industry at a time when the UK is looking for high value strategic partnerships post-Brexit does not bode well.
New US protectionist policies could favour US businesses through tax cuts, job creation and higher salaries for US citizens which will limit the ability for the UK to create new US markets to replace those lost from the single market. Although understandable, the US aiming to reduce their own trade deficit will worsen the trade deficit of other countries in the world – something of particular concern to Rain Newton-Smith, chief economist at the CBI. Profit repatriation by US corporates will mean capital outflows from Europe, which will reduce the stock of investment capital with European institutions, which at the moment the UK is still benefiting from.
Internal US policies could cause outsourcing problems
For some outsourcing companies based in the UK, new US internal policies such as raising the minimum salary for a h1b visa will cause disruption and make the ability for UK companies to keep up a major issue.
New US policies will have POSITIVE impact on UK business and jobs because...
US is constitutionally bound to maintain equilibrium
The fact that the US acts more like a federalised Europe than a single country means that despite the hard line rhetoric the President may show, he will inevitably be tempered by the power of the Congress and Senate. This could mean that current trade deals will remain unaffected, especially as any new deals are estimated to take at least a year to negotiate anyway.
UK business could benefit from a strong dollar
Although the pound has fallen to its lowest level in three decades against the dollar after the Brexit vote, some believe that the new US emphasis on protectionist policies could continue to enhance the strength of the dollar to a weaker sterling. Although there are some downsides for UK business with this, the UK's exports to the US could be competitive if sterling remains weaker.
UK could benefit from new US trade deals
As the US seeks new deals abroad, the UK could also expand in conjunction with the US in this regard, aiming to strengthen the 'special relationship'. Particularly as President Trump has expressed interest in developing trade with countries outside the EU, this could mean that the UK will benefit from new international business relationships with the US after Brexit.
UK could be hub for US expansion in Europe
The UK is already a bustling hub of activity for financial and professional services and if the US want to expand further into European markets, the UK could be the gatekeeper. However, this could definitely be undermined with Brexit as the US could potentially bypass the UK if we do not remain part of the single market.
Trump's rhetoric could encourage high skill immigration to UK
The new administration's stance towards immigration, as seen in campaign speeches and the recent executive orders, has often been hostile. This positioning is making talent all over the world reconsider their location or interest within the US, especially with the potential raised threshold for work visas. The UK, therefore, stands as a potentially attractive market for talents who would have otherwise gone to the US. Nevertheless, the UK will have to be proactive to attract these investors and high-skilled workers though!
New US policies will have AN UNKNOWN impact on UK business and jobs because...
The new US administration is unpredictable
Since taking office, President Trump has had no end of controversies and erratic actions from executive orders to press conferences and allegations. Many UK businesses are finding it hard to assess the impact that new US policies could have because it is unclear whether many of them will stick or become U-turns. Even though the US has signalled it will be friendly to the UK even outside the EU, marketplaces do not like uncertainty and the flip flopping of US policies will slow the development of businesses that want to grow.
Brexit is more of an issue than US policies
There was wide agreement that in terms of immediate effect on UK business and jobs, Brexit was more of a concern for companies. The as yet unknown nature of the Brexit deal means that assessing the impact of the US is even more complex and unclear. Either way, it seems that there was a consensus for the need to try and maintain the US as a “cash cow” whilst we try to make in-roads to new markets if the UK breaks from the single market.
What is very clear from these varied responses is the great uncertainty that surrounds the debate right now. Uncertainty is never good for business as it sends stock markets into freefall hence the generally negative response we received. But the fact it was only just over half shows there is debate around the issue – essentially because no-one yet knows exactly what any new policies might entail before they are formally announced and enacted.
The mixture of uncertainty that surrounds Brexit coupled with the general unpredictability of Trump's policies so far means that this is certainly a difficult time for businesses to adjust to. UK businesses that already operate or outsource from North America will certainly be the ones looking most anxiously at US policies, though any changes could affect a wider range of UK businesses.
With this in mind, perhaps even more key for clients and candidates right now are the skills of communication and problem solving and learning agility that we identified in January's question of the month.
Look out for the next instalment of the Question of the Month series asking what people value most highly for job satisfaction.