For a country with a terrific history, Britain’s ‘leaders’ seem not to have a clue what to do.
Last week we read that some members of the Houses of Commons and Lords want to bar US president, Donald Trump from making a speech to a joint sitting of Parliament.
Apparently, they weren’t happy that President Trump’s administration has attacked Britain’s record on free speech (it’s a terrible record)… and it seems they were even unhappier that Mr Trump would insult the Ukrainians.
For those ‘crimes’, they would seemingly prefer that Britain puts itself offside with what is still the world’s biggest economy, and still the UK’s biggest individual trading partner – although the European Union remains the largest trading bloc.
According to 2023 figures from the Department for Business & Trade, 21% of UK exports went to the US. In the EU, the largest individual export market is Germany with 7%. The EU combined, accounted for 41.2% of UK exports.
At the same time, the Bank of England appears to be taking on the diplomatic role. As reported in the Times this week:
Speaking on the sidelines of meetings held by the International Monetary Fund, [Bank of England Governor, Andrew] Bailey conceded that the US administration was correct in identifying persistent surpluses among manufacturing exporters as a threat to the world economy. He added that China’s economic model, which is built on manufacturing prowess, was unsustainable.
The governor said that Scott Bessent, Trump’s treasury secretary, “has a point … I agree with a bit of the analysis. There are points we have to take seriously about how the world’s system has evolved.”
As we’ve pointed out before, our natural instinct is to oppose anything that gets in the way of a free market. That includes tariffs.
But only a fool would think the current global economic system is even close to being a free market. The proof of that is in the world’s three largest trading blocs: the US, EU, and China.
The US, even prior to President Trump’s tariffs had all manner of import and export rules. The European Union is a protectionist entity. The fact that Britain was ‘locked out’ of the free trade zone after Brexit tells you that.
And as for China… its entire system relies on detailed government intervention and central planning. Companies only produce what they produce at the please of the Chinese Communist Party.
So, while we favour free markets, we have no objection to someone sticking a metaphorical spanner in the works of the current system, to see if it may change the way things are done globally.
We’re under no illusion that the outcome will naturally lead to a totally free market. But we’re under no illusion the current system will either. So why not give Trump’s tariffs a chance. Despite the mainstream hysteria, we genuinely doubt the result will be any worse than the current system.
And who knows… maybe it will be better.
Links to recent content below.
Hope you’re having a great weekend.
Cheers,
Kris Sayce
Publisher, Southbank Investment Research
What you may have missed…
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As the tech market continues to get the rough end of Trump’s tariff stick, companies like Nvidia, AMD, Broadcom are now tumbling to prices that have erased years’ worth of performance. And it raises the question as to whether you should be buying these stocks or sitting back waiting, poised to snaffle them up at lower prices. Or jumping ship and avoiding them altogether.. Read more here…
Everyone’s Wrong About Trump and the Fed
You walk in. They close the door. There’s that weird “we-hope-you’re-doing-well” smile. Uh-oh. You’re about to get fired. They start talking. You’re not even listening. You’re just thinking about how fast you can clear your browser history before IT locks you out. I’ve been fired from just about every job I’ve ever had. Read more here…
The Asymmetric Gold Trade
Gold has reached a new all-time high, surpassing $3,100 per ounce. I anticipate it could climb even higher in the near future. It’s interesting to see the dollar strong and the dollar price of gold strong at the same time. Normally a strong dollar means a lower dollar price for gold. You get more gold for your dollar. That’s not happening. Read more here…
