There’s fear in some quarters of another Donald Trump presidency but will the economics be that bad?
Not a single vote has been counted but the policies of a possible second Trump presidency have already influenced financial markets.
The cost of US and UK borrowing – measured through 10-year revenue-raising instruments called bonds – has been upped as traders eyed the price-rising impact a Trump presidency could have on the world’s biggest economy.
If Trump clinches victory could we see global economic repercussions?
A signature policy of his – tariffs – could make things worse for US consumers, in turn hurting the world economy of which the UK is a part.
Precise detail on what tariffs Trump would apply on what goods and from where remains to be seen. He’s said all goods coming into the country could be slapped with a 10% tax.
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Goods from China are going to be particularly hit with an anticipated 60% levy.
Why tariffs?
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The hope is that by making imports more expensive goods made in the US will be more competitive and comparatively cheaper. More people would buy those things and life would be better for US producers, the thinking goes.
If US producers are doing well, they’ll hire more people, Trump expects. He’s calculating that more people working for US companies doing well will make for a strong economy and happy voters.
Parts of America have been severely impacted by factory closures as companies move to parts of the world with cheaper wages and operating costs.
This accelerated since the 1990s when the North American Free Trade Agreement (NAFTA) made it easier and cheaper to export to the US, reducing the incentive to produce in the country.
Image: Donald Trump campaigns in North Carolina. Pic: Reuters
Blue-collar workers, traditionally not college-educated, lost and continue to lose out majorly from plant closures. These are the voters Trump is targeting and who form his base of support.
It’s worth noting Trump isn’t the only fan of tariffs with the Biden administration implementing them on Chinese electric cars, solar panels, steel and aluminium as it sought to protect the investment it had made in such industries from cheap and heavily subsidised goods.
What will the effect be?
China, unsurprisingly, will be levied the highest and experience the greatest direct strike.
The hit will be “notably negative”, according to analysis from the National Institute of Economic and Social Research (NIESR), a leading thinktank.
It will face short-term pressures on manufacturing and trade with its gross domestic product (GDP) – the measure of everything produced in the country – to fall about 1% a year for two years, NIESR says.
Economists at Capital Economics quantify the cost at about a 0.5% to 0.7% reduction in GDP.
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7:56
UK should ‘expect’ Trump tarrifs
The US
That said the effects will be felt most keenly by those living in the US who will pay more.
If usually cheap imported goods get pricier that probably will cause the overall rate of inflation to rise.
Here the knock-on influences emerge. Higher inflation will just mean more expensive borrowing through upped interest rates as the US central bank, known as the Fed, will act to reduce inflation.
There’s no mystery around how high interest rates can weigh on an economy, the literal goal of hiked rates is to suppress buying power and to take money out of the economy.
Fears of the US ending up in recession spooked stock markets and triggered a global sell-off just three months ago.
Stock prices can seem nebulous but they impact the value of most people’s pensions.
A recession isn’t predicted but the US economy will falter, NIESR says.
Economic growth in America, as measured by GDP, would decrease by around 1.3 to 1.8 percentage points over the next two years, depending on whether the countries it trades with retaliate, upping their own duties on US goods.
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As tariffs make exporting less favourable exporters will simply export less, meaning less is produced and the worldwide economy slows.
The blow to the global economic output could be a 2% GDP drop after five years of Trump being in office, according to NIESR.
The consequences of Trump tariffs won’t just be short-term, NIESR forecasts, with global GDP still lower than it would have been without the imposition even in 15 years’ time.
Specific countries will be hit worse than others: Mexico and Canada for whom the US makes up roughly 80% and 50 % of trade, respectively will experience the greatest pain.
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It doesn’t look too bad for the European Union (EU) by comparison and could even be good for the bloc, some say.
NIESR reckons the euro area will be less badly affected than the UK over five years but the immediate impact will be worse.
The good news first: if Trump doesn’t lean too heavily into tariffs and focuses more on cutting taxes to grow the economy that bump could lead to stronger demand for European goods, notwithstanding import levies, suggests research from economic advisory firm Oxford Economics.
The bad news: it won’t look so good if the US economy turns bad through more aggressive policies like high tariffs on more goods, the firm says. That would mean a “large” fall in European exports, it adds.
And finally, some neutral news: not even high tariffs would be inflationary for the continent, Oxford Economics expects. Reduced demand and lower goods prices would just offset the higher import costs, it says.
Another firm, Capital Economics, also isn’t too concerned about the European economy under Trump.
“Smaller than many fear”, is how it described the suspected short-term macroeconomic consequences.
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How does the US election work?
What about the UK?
It’s got to be bad for the UK, right? The US is the country’s biggest trading partner after all, making up just under 20% of our trade
Again, not so. The UK doesn’t even make it into the top 10 worst-affected countries under NIESR’s research.
Capital Economics anticipates the knock would be small and maybe even positive, though inflation may be higher than if there were no second Trump administration.
But there’s no consensus on this point with NIESR forecasting GDP will be lower because of fewer exports and higher global interest rates.
This downturn would slow UK exports to other countries, NIESR says.
NIESR estimates UK GDP could be between 2.5% and 3% lower over five years and 0.7% lower in 2025. So instead of the 1.5% rate of GDP predicted by the IMF for next year, the economy would grow by 0.5%.
How much have America, Britain and the rest paid Ukraine in aid since the Russian invasion? And do they have any hope of getting money back in return?
These are big questions, and they’re likely to dominate much of the discussion in the coming months as Donald Trump pressurises his Ukrainian counterparts for a deal on ending the war. So let’s go through some of the answers.
First off, the question of who has given the most money to Ukraine rather depends on what you’re counting.
If you’re looking solely at the amount of military support extended since 2022, the US has provided €64bn, compared with €62bn from European nations (including the UK).
But now include other types of support, such as humanitarian and financial assistance, and European support exceeds American (€132bn in total, compared with €114bn from the US).
Divide Europe into its constituent nations, on the other hand, and none of them individually comes anywhere close to the US quantity of aid.
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That being said, simple cash numbers aren’t an especially good measure of a country’s ability to pay.
Look at US support as a percentage of gross domestic product and it comes to 0.5% of GDP. That’s almost precisely the same as the aid from the UK.
Looked at through this prism, it’s other countries which are clearly the most generous: Denmark, Estonia and much of the Baltics providing around 2% of their GDP – a far bigger amount versus their ability to finance it.
Still, compare the aid this time around with previous amounts spent in other conflicts and they are nowhere close.
Lend-Lease during WWII, aid during the Vietnam and Korean Wars, and even the first Gulf War, involved significantly bigger outlays than currently being spent on Ukraine.
That goes not just for the US but also for the UK, Germany and Japan, all of which provided more aid to the Kuwaitis and other affected nations during the first Gulf War.
Even so, it’s clear that the US and others have put significant resources towards Ukraine.
President Trump has been talking recently about recouping $500bn from Ukraine in the form of revenues from mining rare earth metals.
This is, on the face of it, slightly odd. Rare earth metals represent an obscure corner of the periodic table and play a small if important role in electronics and military manufacturing.
The entire market is small – making it essentially implausible that, even if Ukraine suddenly produced the majority of the world’s supply, the president could expect that amount of revenue back in return.
More to the point, while there are a couple of rare earth deposits in Ukraine, they have languished, unexploited, for years. They are so expensive to mine no-one has worked out how to extract the elements and make a profit at the same time.
And even if you presumed they could do, Ukraine would still be a relative minnow in global rare earths production.
Assuming, as one probably should, that Donald Trump didn’t just mean rare earths, but was talking more broadly about “critical minerals” (the two are different things, but let’s not get too pedantic here), there are also one or two other promising mine sites in the country.
There is an old, shuttered alumina plant seized from Russian oligarch Oleg Deripaska. There is a large lithium resource which could, if all went well, be the single biggest lithium mine in Europe.
Yet even taking this into account, Ukraine would still be a relatively small player in global lithium. Not nothing – but not world changing either. Certainly not enough to generate the hundreds of billions of dollars Mr Trump is seeking.
Then again, Ukraine has other resources at its disposal too: vast seams of coal in the Donbas, large iron ore reserves in the south of the country.
Both of these are in or close to Russian occupied areas – which might, from the Ukrainians’ perspective, actually be the point. Old fashioned as this stuff is, it does actually generate significant revenue. It might be Donald Trump’s best hope for some payback.
The number of convictions linked to a second Post Office IT scandal being investigated for miscarriages of justice – has more than doubled, Sky News has learned.
Twenty-one Capture cases have now been submitted to the Criminal Cases Review Commission (CCRC) for review.
They relate to the Capture computing software, which was used in Post Office branches in the 1990s before the infamous faulty Horizon system was introduced.
Hundreds of sub-postmasters were wrongly accused of stealing after Horizon software caused false shortfalls in branch accounts between 1999 and 2015.
A report last year found that there was a reasonable likelihood that the Capture accounting system, used from the early 1990s until 1999, was also responsible for shortfalls.
If the CCRC finds significant new evidence or legal arguments not previously heard before, cases can be referred back to the Court of Appeal.
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Lawyer for victims, Neil Hudgell from Hudgell Solicitors, says the next steps for the Capture cases and the CCRC are still “some months away”.
He said he is also hopeful that the first cases could be referred to the Court of Appeal before the end of this year.
Image: Lawyer Neil Hudgell described victims of the Capture IT system as ‘hideously damaged people’
“Certainly we will certainly be lobbying,” he said. “The CCRC will be lobbying, the advisory board will be lobbying any interested parties, that these are hideously damaged people of advancing years who need some peace of mind and the quicker that can happen the better.”
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1:23
In December the government said it would offer ‘redress’ to Post Office Capture software victims
‘We didn’t talk about it’
Among those submitted to the CCRC – Pat Owen’s Capture case was the first.
Her family have kept her 1998 conviction for stealing from her post office branch a secret for 26 years.
Image: Juliet Shardlow shows Sky News paperwork which could explain discrepancies logged by Capture
Speaking to Sky News they have opened up for the first time about what happened to her.
Pat was a former sub-postmistress, who was found guilty and given a two-year suspended sentence.
She died in 2003 from heart failure.
Image: David Owen and his wife Pat in happier times
Her daughters describe her as coming home from court after her conviction “a different woman”.
“We didn’t talk about it,” said Juliet Shardlow. “We didn’t talk about it amongst ourselves as a family, we didn’t talk about it with the extended family.
“Our extended family don’t know.”
Image: Juliet Shardlow said her mum Pat was a different person after her conviction
David Owen, Pat’s husband, said she lost a lot of weight after her conviction and at 62 years old “looked like an old gal of 90”.
Capture evidence never heard in court
Pat’s family kept all the documents from her case safe for over two decades and now a key piece of evidence may turn the tide on her conviction, and potentially help others.
A document summarising the findings of an IT expert described the computer Pat used as having “a faulty motherboard”.
It also stated that this “would have produced calculation errors and may have been responsible for the discrepancies subsequently identified by Post Office Counters’ Security and Investigation team.”
An MP has accused Meta of turning Facebook Messenger into “Jeffrey Epstein’s private island” by enabling end-to-end encryption.
The Science, Innovation and Technology Committee grilled tech giants X, TikTok, Google and Meta today as part of an inquiry into online misinformation and harmful algorithms.
“Twenty years ago, someone like Gary Glitter had to go to the other side of the world to prey on children,” said Labour MP Paul Waugh to Chris Yiu, one of Meta’s directors of public policy.
“Someone like Jeffrey Epstein had to create his own private paedophile island.
“Now, these monsters, all they have to do is go on to set up a group on Facebook Messenger.”
Mr Waugh was referring to Facebook Messenger’s recent implementation of end-to-end encryption, meaning that no one, not even Facebook, can see the contents of encrypted messages.
Law enforcement agencies also cannot see the messages, which is a constant source of tension between tech companies and governments.
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Just last week, Apple removed one of its highest-security tools for users over an alleged request by the Home Office to be able to see its encrypted user data.
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What the Apple security announcement means for your data
“Isn’t it true that you’ve turned Facebook Messenger into Epstein’s own paedophile island and a place where you can do what you want without getting caught?” asked Mr Waugh.
Mr Yiu denied this was the case and said the issue of online child sexual abuse material needed a “whole of society response” where tech companies and law enforcement agencies worked cooperatively.
He also argued end-to-end encryption is a “fundamental technology designed to keep people safe and protect their privacy”.
The select committee’s inquiry is investigating the spread of harmful content online, sparked by last August’s riots.
The widespread unrest took hold across the country after three young girls were stabbed to death in Southport.
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Online network behind far right riots
In the days that followed, illegal content and disinformation spread “widely and quickly” online, according to the communications regulator Ofcom.
The committee chair Chi Onwurah said Elon Musk, owner of X, was invited to the evidence session but the billionaire did not reply formally.
MP Emily Darlington also quizzed the Meta representative about the company’s recent changes to its content guidelines.
She read out numerous examples of Meta users posting racist, antisemitic and transphobic comments online and asked Mr Yiu how Meta justified allowing those posts to stay online.
“We have received feedback that […] some areas of debates were being suppressed too much on our platform and that some conversations, whilst challenging, should have a space to be discussed,” he said.
X’s representative also faced questions from the MPs, with Ms Darlington asking why verified X users were able to post comments calling politicians rapists and threatening to “rise up and shoot” public figures.
Wifredo Fernandez, X’s senior director for Government Affairs, said he would ask the X team to review the posts.