The was article is provided by Peter Stewart, Senior Marketing Manager at Waverton Investment Management, for Beacon Gainer, private wealth advisory services group.
On Wednesday 11 November Waverton, alongside Spring Capital, welcomed Matthew Goodwin to speak and take questions from a virtual audience. Matthew is known for his work on political risk, geopolitics and regularly gives talks to financial institutions and media organisations.
We’ve summarised the key points from Matthew’s presentation below, and you can view the full video discussion here
An election that did not resolve anything
Matthew began with his reading of the election as a reminder of how American politics and society has become increasingly polarised. Unsurprisingly, exit poll data showed that the most important issue for Trump supporters was the economy, while for Biden’s supporters it was the pandemic response and social issues such as racial inequality and access to healthcare.
Contrary to the dominant narrative, Trump’s appeal did not narrow, it broadened. The theory that populism’s base being solely a dwindling number of non-college educated white males appears to have been debunked by a surge in votes from Hispanic and African Americans. This speaks to a broader shift in political dividing lines, where geography and values are replacing income and social class as deciding factors, underpinned by education and age.
Regardless of the fact that President Trump is yet to formally concede, the likely outcome of the election is that the Democrats will gain the White House and maintain control of the House of Representatives. The Republicans should hold on to the Senate however, and although this will not be confirmed until after the run-off elections in Georgia on January 5, Matthew believes it is unlikely that the Democrats will win both seats as required to win control of the upper chamber. When combined with a somewhat divided Democratic Party and a non-favourable Supreme Court, it appears as though Biden will be a constrained president.
Biden’s initial agenda
Biden’s early executive orders are likely to receive significant scrutiny given the political gridlock in Washington. His priorities will include re-joining the Paris Climate Agreement, eliminating limits on international student visas and reaffirming the country’s commitment to NATO and the World Health Organisation. Broadly speaking, Biden is likely to bring about a renaissance of multilateralism.
Interestingly, aspects of Biden’s agenda will perpetuate economic protectionism however, and many of his policies would not have been out of place in Trump’s playbook. These ‘Made in America’ policies will protect goods and services produced domestically. Biden has also promised to review the relationship with China, but it’s unlikely this will mean a significant change of direction from the previous administration.
The future of the Republican Party
If Trump decides not to run for a second term in 2024, Matthew believes the next Republican will either be a member of his immediate family or at the very least, need Trump’s seal of approval. Given the broad appeal of his policies (he received the most votes for any incumbent president), the next party nominee will likely maintain the balance of leaning left on the economy, and right on culture.
What does this mean for Brexit Britain?
President Biden will be welcomed by many around the world as restoring the liberal and multilateral political order. However, it is clear that Biden opposes Brexit and there is a risk that Brexit and the pursuit of a free-trade agreement could become a proxy battle on Trumpism in Congress. Given the number of democrats attempting to draw a line under the Trump administration, this should be a concern for Prime Minister Johnson.
You can view the full video discussion here