As the U.S. heads into a contentious election in November, a surprising sentiment is brewing in the City of London: a cautious optimism at the prospect of Donald Trump returning to the White House. While Trump’s presidency was marked by unpredictability, the financial hub of London is intrigued by the potential benefits of his laissez-faire stance on finance, especially as it seeks to recover from the economic impacts of Brexit.
Trump’s Appeal to the City
Despite the chaos that often characterized Trump’s first term, some in London’s financial district see his possible return as an opportunity. Trump’s approach to financial regulation, perceived as more relaxed, could open doors for the City to access the U.S. market—a crucial advantage as London tries to recoup lost business from the European Union.
A senior U.K. financial lobbyist, speaking on condition of anonymity, hinted at the benefits of a Trump presidency: “You could have a White House that may want to have a less restrictive regulatory framework for financial services, which might indirectly engender more financial flows across the Atlantic.”
Faded Memories of Chaos
Memories of the volatility during Trump’s first term have faded for some in the City. As a senior City lawyer, also granted anonymity, pointed out, “Trump has been president once before, and it did not lead to a run on the dollar or any major problems in financial markets, even though a number of his policies were controversial.”
In contrast, a Kamala Harris presidency is viewed with more uncertainty. Her economic platform includes targeting big businesses for price-gouging, a stance that raises concerns within the financial sector.
Potential Benefits and Risks
The City’s interest in Trump isn’t without its caveats. Trump’s protectionist views on global trade and controversial opinions on international issues like the war in Ukraine could unsettle markets. However, his previous appointments to regulatory bodies like the SEC and CFTC—figures with industry backgrounds—have left some in the City hopeful that a second term could see similarly favorable choices.
Angus Canvin, director of international affairs at UK Finance, noted the positive impact of Trump’s past appointments, saying, “When Trump won in 2016, he appointed very competent people from our industry to the SEC, CFTC, and FDIC.”
The Golden Goose: A U.S.-U.K. Trade Agreement
For the City, the ultimate prize under a Trump presidency would be the inclusion of financial services in a U.S.-U.K. free-trade agreement—a possibility that seems remote under the current administration. If Trump wins, there’s hope that such an agreement could ease access to the U.S. market or lead to a rollback in financial regulations, benefiting the City’s post-Brexit growth strategy.
Even the U.K.’s political landscape, currently under the center-left Labour government, might not pose a significant barrier. Historical precedents, like the close relationship between Tony Blair and George W. Bush, suggest that economic pragmatism could prevail.
Crypto Enthusiasts Back Trump
Trump’s recent embrace of cryptocurrencies has also caught the attention of the digital asset community. Despite previously calling Bitcoin a “scam,” Trump’s shift has been noted by crypto firms in both the U.S. and U.K. George McDonagh, managing director at London-based KR1, remarked that those in the crypto industry could be “single-issue voters” driven by the direct impact of policy on their financial interests.
Weighing the Risks
While the City’s optimism is palpable, the risks are not ignored. The Bank of England has expressed concerns over the potential financial instability that could arise from geopolitical risks associated with global elections. Their June financial stability report warned that “political uncertainty” could amplify vulnerabilities in global and U.K. financial markets.
Nevertheless, for the City of London, the potential rewards of a Trump presidency might just outweigh the risks.
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