So, we have a new president in America. And by a clear margin. President Elect Trump’s victory was substantial, but he wields more power than a normal president. With Republicans dominant in the Congress, The House of Representatives and his placemen dominating the Supreme Court, there is very little that can stand in his way. But does that matter for Wyre Forest?
Not directly, of course. But indirectly, it could.
Trump’s challenge of “Making America Great Again” has implications for the rest of the world. It can take various forms. Already, he claims he can end the war in Ukraine in 24 hours, but we know Ukraine will want back its occupied territories, whilst Russia will cede nothing. So, who will have to compromise to achieve ‘peace’? But any peace comes with a requirement to maintain it, and Trump has indicated he will withdraw the US from NATO, or reduce spending. His point is reasonable. NATO countries have enjoyed US largesse for many years. If the US cuts its NATO contribution, the rest will have to increase theirs. The means a hike in the UK’s defence spending, probably beyond the 2.5% promised by Starmer.
What about trade? Trump has indicated he will impose tariffs on imported goods. Ignoring the economic illiteracy of this (it will increase US domestic inflation), it will reduce exports from affected countries. UK exports to the US will either reduce on volume, or in profitability. Or both. Even if he targets other countries, like China, there is a knock-on effect.
So, the actions of an American president can have an effect locally, here in Wyre Forest, on prices, and money available for public services.
These things happen. We have pandemics (once in a 100 years), and energy price shocks. But the recent budget from our new Labour government has given the government just a tiny amount of headroom to deal with these shocks. Indeed, far less than before. The budget already cuts growth projections and increases inflation. It cuts standards of living with tax measures affecting both public services and workers. So just a little external shock, like more inflationary pressures and increase pressure on taxpayers’ resources, cannot be resolved by the Treasury.
Labour makes a great deal out of the “economic chaos” they found when they came to power. But only time will tell what public finances will look like in 5 years’ time. Many are pessimistic.