How the Policies of the Trump and May Could Affect Personal Savings in 2017
Not since the days of the American Revolution has there been a time when the leaders of two countries have been so controversial on both sides of the Atlantic. There is no reason, at this point, to hash over history as everyone knows how, why and when the US gained Independence, but oddly, the two have stayed staunch allies over the ensuing centuries.
However, last year saw previously unheard of political drama in both nations that resulted in a change of power and it is this very change that has citizens in both countries worried about their financial future. As a result, the world now looks at what those policies will be between the two world leaders who are being labelled the world’s ‘Odd Couple,’ Donald J Trump and Theresa May.
Late January Meeting Between the Two Leaders
On Thursday, 26 January, Prime Minister Theresa May stepped off her plane at Andrews Air Force Base, prepared to meet with President Trump the following day. It was her intention to discuss trade between the two countries going forward along with how important she feels the military alliance of NATO is vital to the security of both nations.
As the talks progressed, Donald Trump assured the Prime Minister that trade between the two nations would be “stronger than ever” and that they would forge a bond stronger than any in the past. In response, Prime Minister May is reported to have said that she looks forward to “expanding the special relationship” that Britain has with the United States.
Will Increased Trade Be Enough?
Unfortunately, there are a number of critics who feel that increased trade between the United States and Great Britain will not be enough to sustain the economy in the UK. This has workers and pensioners worried about their savings and investments because interest rates are directly related to the national economy. If that increased trade isn’t equivalent to the amount previously attributed to the amount between the UK and EU nations, it certainly won’t save Britain’s economy in 2017 and beyond.’
A quick look at some key statistics will tell you that even increased trade between the two nations will not solve the UK’s economic woes if Brexit doesn’t agree acceptable trade arrangements with the EU. As of last year, the UK imports more goods from the EU than they export, which already places them at a disadvantage and the same holds true in trade with the US. A quick glance at the following statistics will explain why there is much concern that increased trade between the two nations will not solve the UK’s woes.
- 2016 imports from the UK to the US totalled $54.365 Billion USD
- 2016 exports from the US to Great Britain totalled $55.395 Billion USD
This means that the UK is importing more than they are exporting, so they are on the short end of the stick by just about $1 billion USD annually. Now then, import/export statistics between the UK and the EU indicated a £39.4 billion trade deficit and that’s why many feel increased trade with the US will not really affect the economy to the extent newscasters predict.
Trading Forex and Indication of Each Country’s Economy
One of the things which can be an indication of how the world views an economy is the relative value of that country’s currency in the Forex market. For years, the GBP was quite high against the USD as UK firm ETX Capital statistics indicate. However, after Brexit, the pound took a nosedive to a fraction of what it had previously been valued at and now the USD is strong against the GBP Sterling.
Being one of the leading currency pairs, the USD / GBP should be watched carefully for the relative strength of each market. If an economy is strong, interest rates will be higher and so those placing money in an interest bearing account would accrue more gain than if the pound was weak against the dollar. A strong economy means you yield a higher interest when saving or investing and this is the time you might make the most money in a shorter period of time.
Even so, a sluggish market might only mean you have less to invest but it is also a good time to invest, especially if you are worried about trade and the economy going forward. A tidy little nest egg is reassuring when the future looks bleak. This is a time to carefully watch both economies if you are a Forex trader because a volatile market is even more so with these political events unfolding by the day.
Which Policies May Affect Personal Savings?
At the root of most people’s financial woes is the fact that immigration was a huge factor in the election of Donald Trump to the presidency in the United States and Theresa May’s taking over the reins from Prime Minister David Cameron as a result of the Brexit vote last summer. Both countries voted that they were concerned with an open job market where foreign nationals were taking the jobs their country’s naturally born residents could be employed by.
Unfortunately, economic concerns are directly proportionate to each country’s handling of immigration and sanctuary for refugees. If we cut diplomatic and trade relations with nations from which refugees and immigrants are being forbidden, trade could come to a sudden halt. Being that the United States only accounted for a very small portion of the UK’s foreign trade and ensuing GDP, an increased amount of trade may not make the difference necessary to sustain the British economy.
Why Concern for Personal Finances?
What most people are hearing is that there may be hard times ahead if England and the United States break off trade with other countries that have been leading trade partners for generations. In the UK, they are wondering what will happen to their personal savings if there is a huge interruption of trade with their leading trade partners in the EU. The same holds true in the United States. What will happen if President Trump has his way and is able to disband the NAFTA agreement signed into law by President Bill Clinton? And what will be the impact on the UK economy if Brexit takes a hard exit?
Because of all the tension at the moment, people in both nations might want to add to their savings in case their economy doesn’t fare well in 2017. Whether you invest in markets such as Forex or simply add to hedge funds and pensions, it is a time to increase your savings rather than freeze them. This will help you through a rough future should it unfold.