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Britain’s bankers want Donald Trump back
Trump’s more laissez-faire stance on finance could in theory make it easier to access the U.S. market.
August 27, 2024 5:00 am CET
Source: Politico | By Hannah Brenton and Eleanor Myers
LONDON — Whisper it, but the City of London wants Donald Trump back.
As the U.S. heads for a highly contentious and close election in November, at the top of London’s pragmatic financial district there’s a distinct lack of fear, and even a little enthusiasm, at the prospect of Trump returning to the White House.
Of course, it’s not all sunshine and rainbows. For the free-market City, a Trump presidency could come with unwelcome protectionist attitudes toward global trade and potentially inflammatory views of the war in Ukraine, which could roil markets.
But Trump’s more laissez-faire stance on finance could also in theory make it easier to access the U.S. market at a time when the City is trying to find growth, having lost a chunk of its EU business after Brexit.
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“You could have a benign attitude in the White House,” said a senior U.K. financial lobbyist, granted anonymity to speak freely.
“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
Trump may have been wild and unpredictable in his first term, but some in the City now shrug off the potential chaos of another stint in office.
“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,” said a senior City lawyer, also granted anonymity.
Instead, a Kamala Harris presidency is now the big unknown — and a key plank of her economic plan involves attacking big business for price-gouging and driving up food prices.
“He is generally seen as pro-business and, from that perspective, the City is likely to be more positive than for Kamala Harris whose policies are probably going to be less helpful to business,” the lawyer said.
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Some of the Trump fear factor has also reduced because the City liked his appointments to top regulatory roles. Many had a background in the industry, and there’s hope the same might happen this time.
“When Trump won in 2016, he appointed very competent people from our industry to the SEC [Securities and Exchange Commission], CFTC [Commodity Futures Trading Commission], and FDIC [Federal Deposit Insurance Corporation,” said Angus Canvin, director of international affairs at UK Finance, which represents U.K. banks.
Under the Trump presidency from 2017-2021, former Goldman Sachs exec Steven Mnuchin was named U.S. secretary of the Treasury. Christopher Giancarlo, a former executive at swaps broker GFI Group, was chairman of the CFTC.
And Randal Quarles, a private equity investor and veteran of the Treasury Department, was Trump’s top banking regulator at the Federal Reserve.
“The political appointments determine the political agenda in terms of trade for financial services and more,” Canvin added.
The positives
For the City, the real golden goose under a new U.S. president would be being able to insert financial-services terms into a U.S.-U.K. free-trade agreement.
That idea died under President Joe Biden and seems unlikely to be revived under a Harris presidency.
But under Trump, it could, just maybe, become easier to sell financial services into the U.S. or cooperate better across borders either through an elusive deal or via more general regulatory rollback.
When it comes to securing better terms for the City, U.S. willingness will be a bigger factor than who’s at the top of British politics, because, at least for financial services, access to the U.S. market, especially for states like New York, is the prize.
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While Britain’s new center-left Labour government may not be natural ideological bedfellows with a populist Trump presidency, neither were former U.K. Prime Minister Tony Blair and ex-President George W. Bush, and they were close allies.
And U.K. Chancellor Rachel Reeves has signaled her intent to work across the Atlantic. In her first month in the role, she jetted off to New York City and Washington to call on top U.S. financiers and investors to back U.K. projects. With growth her number one priority, Reeves has indicated she could seek to revive trade talks between the two jurisdictions if Trump wins.
Crypto fans
One part of the financial industry in particular is hoping for a favorable setup.
Donald Trump’s recent embrace of cryptocurrencies has been noticed by crypto firms on both sides of the pond, despite him once describing bitcoin as a “scam.”
“It wouldn’t surprise me that people [in the U.K.] whose livelihoods depend on the crypto industry were very pro Trump,” said George McDonagh, London-based managing director at KR1, a digital asset investment firm.
He added that many involved in the crypto industry are “single issue voters.”
“Where is there such a direct connection between someone’s financial situation and policy?” he said.
Still, that doesn’t mean the City is blind to the potential risks Trump and his penchant for impulsive and personal decisions could bring.
The Bank of England, for one, has its eye on geopolitical risks that could create financial market volatility or derail any economic rebound.
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In its June financial stability report, the U.K. central bank’s supervisory arm warned that “political uncertainty” associated with global elections “has increased.”
It highlighted concerns that “geopolitical risks could interact with each other and increase the likelihood of other vulnerabilities crystallizing, amplifying the impact on global and U.K. financial stability.”
But for the City of London, it might just be worth rolling the dice.
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