If Trump delivers on his promises, an economically strong US could be good news for the UK and consumer confidence
It would be foolish to think the UK housing market responds only to changes in the economy. It is very dependent on consumer confidence – and nothing affects confidence more than world events.
So, what effect will the new US president have on UK consumers? The populist view is that Donald Trump is a maverick: a loose cannon who may do more to destabilise the world than to bring calm and order. But is that true?
Sure, he is a political outsider who seems to revel in turning the old order of Washington politics on its head. However, beneath all his bluff and bluster is a businessman who says he intends to put the US economy, jobs and prosperity at the top of his priority list.
He has said he wants to boost growth to 3.5 per cent and create 25 million new jobs over the next decade. He argues that 1 per cent added to GDP growth would create another 1.2 million jobs a year and that a key to unlocking growth is scaling back over-regulation, which costs the economy $2tn (£1.62tn) each year.
He has also promised to reduce and simplify the national tax burden for US citizens and businesses, and to increase spending on transportation and infrastructure, which he claims will create many thousands of new jobs.
From a trade perspective Trump’s stance is protectionist, but he has indicated he may look favourably on cutting a deal with the UK. There is already talk of Britain and the US signing a ‘statement of intent’ before the UK formally parts ways with the EU.
If Trump delivers on his promises, an economically strong US could be good news for the UK and consumer confidence. There is a danger the uncertainty caused by Brexit could make homebuyers a bit more wary, but there is nothing like an economic upturn to help allay any fears.
Trump may be just what the UK housing market needs right now.
Peter Izard is business development manager at Investec Private Banking