Despite appearances, the UK is unlikely to be in the deep freeze under Biden​

 

At the time of writing, we don’t know who will be declared winner in the US Presidential election. But on past form, the Democrats normally pull ahead when the postal votes get counted and the judicial system tends to rule that the states have the right to determine how their votes are counted. Unless fraud can be substantiated to a very high level of proof, the judges don’t like to get involved. So although there were a few things about the election that looked pretty dodgy on both sides, we agree with the bookmakers that Joe Biden is more likely than not to be declared the winner eventually.

 

I might have been one of the few people to have been focussing more on the Senate races than the presidential race. I expected Biden to win, and my concern is that the concentration of too much power in the hands of one party is often dangerous. While there are still some open situations it looks likely that the Republicans have kept control of the Senate, which will limit the net pressures on Biden if he wins from the left-leaning wing of the Democratic party.

 

There are several interesting implications for the UK from a Biden Presidency. This note looks at three – the prospects for Brexit, for the ‘special relationship’ and for a UK-US trade deal.

 

A Biden victory could make Brexit more difficult by emboldening the EU negotiators to take a harder line. But you could turn this logic round to say that it would make the UK government more willing to do a deal. Net we suspect it doesn’t make a huge amount of difference to the chances of a deal but may make any resulting deal slightly more EU friendly, especially in areas to do with Ireland where Joe Biden has a particular interest. We still on balance expect a deal to happen.

 

Most commentators think that after the apparent closeness of relations with Trump, Britain would be out in the cold with Biden. But these things are never quite as stark as they seem. The apparent closeness to Trump didn’t help the UK much. While Biden’s approach to resuscitating the Western alliance would probably end up needing to involve the UK as well as the EU member states. While there may be some apparent diplomatic snubs while the US rebuilds relationships with France and Germany, the high-level links in security and other areas between the UK and the US will remain and probably strengthen in a world where the US starts working with others again.

 

On trade, the outlook is more interesting. It does not seem that there is much drive pushing the US -UK trade deal forward at present, though I suspect a side deal between London and New York on financial markets may be on the cards.

 

But there is an interesting alternative approach that is coming up on the rails, that has been suggested by economist Dilip Shah. Most people may be unaware of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), also known as TPP11 or TPP which is a trade agreement between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The US were going to join before Trump was elected and pulled the country out but the other members went ahead with the deal anyway. With the UK now having signed or getting very close to signing trade agreements with Japan, Canada, Australia, Singapore and New Zealand it would probably not be too difficult for the UK to join CPTPP and formal negotiations have already started. If the US also joins the agreement again under Joe Biden, most of the substance of a UK-US trade agreement will in fact emerge through CPTPP.

 

So despite appearances, the UK is unlikely to be in the deep freeze under Biden. In fact, moves to enhance international cooperation could even lead eventually to closer links.

 

 

For more information, please contact:

 

Douglas McWilliams dmcwilliams@cebr.com phone: 07710 083652​