Monday 10 October 2016 4:30pm
Nancy Hungerford
Some think Trump has blown it (Source: Getty)
The diminishing chances of a Trump presidency have put Europe back in the market’s crosshairs, as the sterling flash crash and lingering fears over Deutsche Bank keep investors on their toes.
There are lessons to be learned across the Atlantic from the indiscretions of the man who once called himself “Mr Brexit.” Trump rose to fame by tapping into the frustrations of disenfranchised and angry voters – a mood that stretches well beyond America’s borders. City insiders should take note and think twice before declaring “May Day” over the UK Prime Minister’s perceived working-class pivot at the Conservative conference. Critics who bemoan May’s model of inclusive capitalism or her hard immigration stance should take a long, hard look at the alternatives.
If May’s promise to correct market failures sends shivers up your spine, you only have to travel 280 miles to Paris to witness how populist pressures are pushing government intervention to new extremes.
President Francois Hollande may have been as surprised as anyone to find himself at the centre of the sterling storm. The embattled French leader had spent most of the week putting out political fires at home with the controversial rescue of Alstom’s Belfort plant. “French government orders fast trains for slow tracks” ran the unintentionally ironic headlines. The plan includes around €600m (£540m) worth of orders for high-speed TGV trains the country currently doesn’t need on top of a €70m investment in the 137-year old factory.
Hollande has ordered millions of euros of trains he doesn't need (Source: Getty)
Government interference in state-backed businesses is nothing new in France. But with six months to go before a national election, the political brickbats were being thrown in all directions over the ruling government’s inability to save 480 jobs at the economically irrelevant factory. Never mind that the jobs were due to be transferred rather than cut, or that investors had largely welcomed Alstom’s willingness to get tough on costs. Hollande determined he could not afford another blow when Marine Le Pen, whose National Front is gaining traction in the industrial North East, is breathing down his neck.
The Socialist’s market-meddling in France might seem a world away from Westminster, but it could easily make a creep across the Channel if the Prime Minister does not make a success of Brexit and the Labour opposition puts its leadership struggles to bed. Debating the sincerity of sitting on a Virgin train floor feels refreshingly tedious compared to living under a government that is willing to put fast trains on slow tracks at taxpayers’ expense.
Until the sterling flash crash, there was an eerie calm over the City in the wake of the Bank of England’s swift action and a run of good UK economic data. This made it easy for us in the capital to become complacent over the populist angst that gave way to Brexit. In reality, the 17.4m Britons who voted to leave the EU are not going anywhere. Rather than getting on with business as usual, the Prime Minister should be applauded for correcting the wrongs of tone-deaf leaders who have gone before her. If she succeeds, Theresa May could end up saving the City from itself.
