CEO Update
Published: 6 January 2025
If 2024 was the year of elections, 2025 is the year of consequences.
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Duncan Edwards OBE
CEO
ÐßÐßÊÓƵ
As President Obama famously said, ‘elections have consequences’ and as 2024 was the year for elections in the US and the UK, 2025 is when the business community will feel the impact of those elections, for better or for worse.Ìý And it is hard not to focus on the US just a couple of weeks before the inauguration of President Trump for the second time, reflecting on the many pronouncements made by him and his team on the campaign trail and subsequently.Ìý Anticipation of a business-friendly tax and regulatory environment, powered by low energy costs, has got a lot of people very excited about the opportunities in the US and we expect this excitement to have a material effect on investor and corporate behavior.
Less positive has been the continued talk of tariff barriers, either as a permanent feature of the US market (as they were for much of US history) or as a negotiating tactic to achieve other aims.Ìý Traditional free traders are on fire about this but there is a group of true believers who are convinced that the US having a more open market (as measured by tariffs and non-tariff barriers) than many of its trading partners has not been in the long-term interest of the US and has led to the massive trade imbalances that the new President has in his sights.Ìý I, for one, don’t think this is a bluff and the US, with its huge domestic economy, is better equipped to weather the downside of more friction and cost in trade, than its counter parties.Ìý For certain, any company that sells a significant amount of product into the USA, but doesn’t manufacture there, is going to review its approach.ÌýÌý
As always, we wish the new administration in the US the very best as they take on the huge challenge of government and as the American Chamber of Commerce in the UK and the British Chamber in the US, we will be working hard to encourage a positive and open approach to trade and investment between these two great historic partners.Ìý
As ÐßÐßÊÓƵ members will know, the UK government took a fair old battering from the business community in the last couple of months of the year as the real costs of the tax rises, employment rights bill and energy policies were totted up. ÌýIt is not what we had hoped for, but we expect the UK to remain an important hub for US companies in 2025. ÌýPartly this is due to the existing installed base of operations which make new investments more efficient, partly it is because assets look well priced if you are holding dollars and partly because the alternative destinations in the region all have problems of their own. ÌýÌý
Perhaps recognizing the frustration, at the end of December, the Prime Minister asked UK regulators for ideas that might stimulate growth which is all very laudable, but in the end, the cost and complexity of doing business…tax, energy, regulation, employment…will be the decisive issues.Ìý
The UK has a relatively neutral trade balance with the US and, historically, has not been an option for off-shoring based on labor costs (although this may be a growing issue in financial and professional services) and so is not really the target for the more aggressive Trump trade policy.Ìý The problem is that the UK may get caught up in a more generalized regional approach, aimed mainly at the EU, unless it finds a way to get exempted.Ìý
And no doubt, trade will be high on the agenda for Lord Peter Mandelson who was announced over Christmas as the UK’s new Ambassador to the United States. ÌýFor those ÐßÐßÊÓƵ members less familiar with UK political detail, Peter Mandelson was one of the great architects of the New Labour project led by Tony Blair and Gordon Brown. ÌýHe served in the Blair and Brown cabinets in various roles and was also a Commissioner representing the UK at the EU with responsibility for the trade portfolio. ÌýHis appointment breaks the usual convention of appointing career civil servants into this role but his political nous and experience should be a real asset. ÌýI am pleased to say that Peter has also been a long-term friend of ÐßÐßÊÓƵ, often attending the meetings of our Advisory Board in his capacity as co-Founder and President of Global Counsel the political consultancy and ÐßÐßÊÓƵ member.Ìý
And whilst welcoming the appointment of Peter, I will publicly congratulate Dame Karen Pearce DCMG, on her brilliant tenure as Ambassador.Ìý As the UK cycled through four Prime Ministers and five Foreign Secretaries, Karen was the consistent voice and presence for the UK in Washington and has been a terrific partner to ÐßÐßÊÓƵ.Ìý
ÐßÐßÊÓƵ Trade and Investment Policy Conference, Feb 25th, London
Very timely, ÐßÐßÊÓƵ is convening a one-day policy conference in London on Feb 25th specifically focusing on the UK Industrial Strategy and US-UK trade and investment. ÌýWe are building a terrific roster of speakers including the UK Business Secretary, Jonathan Reynolds. ÌýThis will be a must attend event for executives and public policy professionals from US companies in the UK and UK companies with a big exposure in the US. ÌýYou can see more details and register for the event here.Ìý
New UK Travel DocumentationÌýÌý
Heads up for UK bound travelers from the USA, from Jan 8th 2025, you will need an Electronic Travel Authorization (ETA) before you travel if you do not hold a British or Irish passport.Ìý The cost is £10 and each ETA is valid for 2 years.Ìý It is important to note that an ETA is required even if you are transiting through a UK airport, an issue which doesn’t seem to make much sense to us and we are looking in to. Dual Nationals should be exempt so long as they travel on their UK passport. More information .Ìý
Whether you are planning to travel or not, all at ÐßÐßÊÓƵ wish you the very best for the year ahead.Ìý As always, there are going to be challenges to deal with and opportunities to grasp.Ìý Whatever you have planned for the year, we look forward to being with you along the way!ÌýÌý