Last month Joe Biden was sworn into office on the steps of the Capitol building.
With Biden in the White House, the US’s position on the world stage will now shift. And, post-Brexit, the US and UK’s “special relationship” will be more important than ever.
How will Biden affect global markets and the UK economy? Where will Biden and Johnson find common ground on world issues? And what will his election mean for your finances?
Read on to find out more.
Joe Biden and Brexit
President Biden was vice president to Barrack Obama when the latter said that the UK would end up “at the back of the queue” for a trade deal if Brexit went ahead. Biden himself has said that Brexit was “not how we would have preferred it to be.”
He has also made clear that he won’t be looking to make trade deals within at least the first 100 days of his presidency as he looks to settle the ship back home, getting to grips with the coronavirus pandemic and the economy with a raft of executive orders and stimulus packages.
With a Brexit deal agreed, Johnson will hope that he and Biden can find common ground, with both economies looking to recover from the strains of the coronavirus pandemic.
Joe Biden and climate change
The Guardian reported back in January that Biden had signed the necessary paperwork to return the US to the Paris accord just hours after becoming president. The 30-day notice period has now elapsed, making it official.
Having returned to the accord, the US will now need to follow the rules set out by the agreement – as will the UK – meaning a sharp departure from the “America First” agenda of the Trump administration.
Targets for carbon neutrality, aided by his cancellation of the Keystone XL pipeline permit, realigns the US with the UK and the rest of the Paris accord signees in committing to real change.
The US and China
Before the coronavirus pandemic, the largest sources of global economic instability were Brexit and the US-China trade wars. The BBC reports that “US antipathy towards China and attempts to contain its rise will continue in the Biden era.”
The approach though will be different. Where Trump blocked and undermined the World Trade Organisation, Biden may well look to the EU and the UK as allies, joining forces to tackle the issue at the D10 summit (formerly a G7 summit) in Cornwall later this year.
But Biden will want to address the technological monopolies of Chinese companies, such as Huawei, and to address the human rights abuses against the Uighur minority in China’s Xinjiang region.
Biden and your finances
US elections, Brexit, and the coronavirus pandemic have all led to volatility in global markets. Uncertainty makes the markets nervous, but the effects tend to be short-lived. Your investments, on the other hand, are for the long term.
There may be a new president in the White House, but if your long-term financial goals haven’t changed, your plans don’t need to either. Here are three key things to remember:
- Stay calm
Short-term volatility has happened before, and it will happen again.
It is time in the market, not timing the market that matters, so stick to your plan. Staying calm – and staying invested – gives you the best chance of taking advantage of a rising market when the recovery begins.
- Ignore the noise
The coronavirus pandemic caused massive uncertainty and the worst day for the FTSE 100 in more than thirty years. The S&P 500 and the Dow Jones were similarly hit.
It would have been tempting to alter your financial plans at that point but remaining non-emotional and avoiding knee-jerk reactions is key.
- Let the markets work for you
Markets are efficient and their general trend is an upward one. They reward long-term investment, which is why we would only ever suggest you invest for at least five years or more.
A lengthy term helps your investment recover from short-term dips, so let the markets do the heavy lifting for you.
Get in touch
After an unconventional four years under President Trump, Joe Biden set out to roll back some of the former administration’s more controversial changes within hours of his inauguration. Although a return to the special relationship under former leaders might be harder to forge, there is at least common ground on climate change, China, and the Covid-19 response.
Whatever the Biden administration means for the global economy, remember that if your long-term goals haven’t changed, it is unlikely that your financial plans need to either.
If you’d like to discuss any aspect of your financial plans or future aspirations, please get in touch. Email enquiries@hda-ifa.co.uk or call 012 42514 563.
Please note
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation which is subject to change.
