‘The most pressing issue is COVID-19 and a Biden victory appears to be good news for US businesses’ UK leaders react to Biden win
Joe Biden is set to become the next president of the United States, having reportedly polled a record number of votes in an election that had the highest voter turnout since 1900.
Donald Trump – who fought Biden in the election – disputes the result and says he will take legal action in the coming days.
But what does Biden’s election mean for the UK and US relations, in the context of Brexit and an uncertain world?
Christian Stadler, Professor of Strategic Leadership at Warwick Business School, comments: “The most pressing issue is COVID-19 and in that respect, a Biden victory appears to be good news for US businesses. He has shown a greater desire to deal with the health issues and has put together a massive investment programme to help businesses come out of this epidemic.
“It’s not all good news for businesses. Biden plans to increase corporate income tax from 21 per cent to 28 per cent and he is likely to bring in more regulation. However, some sectors might actually welcome more regulation. For example, Silicon Valley like welcome clearer rules on issues such as freedom of speech, which is currently an ethical minefield.
“There are other key benefits for businesses under a Biden administration. Stability is very important for businesses and they can expect less policy flip flops under Biden than Trump. Indeed, the University of Chicago has observed that policy uncertainty was greater under Trump than it has at any other time since 1985.
“US businesses will also welcome an end to the trade wars pursued by Trump. That’s not to say there won’t be ongoing tensions with countries like China on human rights issues, but we don’t expect Biden to adopt the same harsh attitude to international trading partners that we have seen in the last few years.
He comments further: “We can also expect to see a more positive attitude towards immigration under Biden, which is good news for businesses at all levels. Key players such as Microsoft, Google, and Tesla are all led by immigrants.
“Biden’s victory is also likely to have a significant impact on businesses in Britain too. The Johnson government would have been more likely to pursue a no deal Brexit following a Trump victory, as they would be hoping for a quick and favourable trade deal with the US, though it is impossible to predict what kind of deal you will get with Trump.
“Under Biden, the US is more likely to favour a close relationship between the UK and the EU and a fairly comprehensive deal. As business leaders in the UK have repeatedly raised concerns about the prospect of a no deal Brexit, they will welcome a Biden victory and the prospect of a closer relationship with the EU.”
Stocks ride higher on Biden win as Brexit comes into focus
Susannah Streeter, senior investment and markets analyst. Hargreaves Lansdown
Stocks in Asia continued an exuberant rally, on hopes a Biden Presidency would thaw trade relations, and that appears to have had a knock on effect on the FTSE 100 which has seen a post-election bounce this morning. But gains are likely to be held back as the focus returns to Brexit, with a trade deal still yet to be agreed.
An incoming Biden administration is certainly not going to offer an easy path to a trade deal between UK and the US and could even determine the shape of relations between Britain and the EU. Joe Biden has already expressed disapproval of proposals for the UK to potentially break international law on certain aspects of the withdrawal agreement, which is likely to concentrate minds at No.10.
The struggle faced by European governments in stopping the rampant spread of Covid 19 is also likely to be put on lid on gains, with many industry sectors struggling under the burden of enforced closures.
The overall sentiment washing through markets is one of relief that a US President has been declared, though there are sure to be lengthy legal challenges ahead.
Far from being on the back foot, shares in big technology companies have been climbing back up to recent heady heights. Although it appears this was a decisive vote against Trump, it wasn’t a rejection of the Republican Party and Democrats haven’t been able to wrestle control of the Senate. Investors are increasingly confident that it will be much harder for the Democrats to push through legislation aimed at tougher regulation of the tech giants.
Biden’s higher tax plans for corporates and high-earning individuals may also face stumbling blocks in Congress if Republicans cling onto a majority in the Senate. The huge stimulus plan which promised to spend billions on America’s crumbling infrastructure and on a green deal to support renewables, could also be scaled down.
But with Biden’s experience working across the aisle with Republicans there is a good chance that prolonged budget gridlock will be avoided and that the focus could switch back to big tech ethics and just how much power the giants should wield.