What would a Hillary Clinton victory mean for post-Brexit Britain?

Clinton has made no secret of her views on Brexit – she doesn’t much like it, and she is likely to follow the line set by Obama that Britain will be ‘at the back of the queue’ for a trade deal

Clinton may support New York as a rival to London's financial eminence (Getty)

While not as protectionist in her instincts as Donald Trump – it was her husband Bill, after all, who signed into law the historic North America Trade Agreement with Canada and Mexico – Hillary Clinton has struck some notably hostile noises about the current pattern of US trade deals.

She has unequivocally stated that she would block the proposed Trans Pacific Partnership Agreement, which seeks to build a new closer economic relationship between the US and China, principally, as well as other Pacific Rim nations, some of them fast-growing (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam). Quite apart from its trade and prosperity boosting results, it would help strengthen some strained relations with friends and allies across the oceans, notably the Philippines, once an American colony, then a puppet, now a wayward acquaintance led by a man who makes Donald Trump look liberal, President Rodrigo Duterte, and who is openly flirting with Russia. The Philippines, Vietnam and Malaysia need America to counter a more assertive and expansionist China in the South China Sea. Remote from Britain, true, but we all know what instability and an East Asian currency crisis can do to the world economy (and if not, look up the 1998 fracas).

Given all that, a trade agreement with the EU, (the Transatlantic Trade and Investment Partnership) or the UK for that matter would also be treated sceptically by a Clinton White House, let alone Congress, which has to ratify all US treaties. As a former Secretary of State she would express herself diplomatically, and observe the niceties of summits and talks, but don’t expect that much on trade from her, either bilaterally or via some great leap forwards in the World Trade Organisation regime (which would be Britain’s default position if Brexit meant hard Brexit).

If Clinton 2.0 represents a broad continuation of the policies of the Obama administration, then it doesn’t look that encouraging for post-EU Britain. Clinton has made no secret of her views on Brexit – she doesn’t much like it, and she is likely to follow the line set by President Obama in his famous intervention, that Britain will be “at the back of the queue” for a trade deal. This would be particularly disturbing if it meant any worsening in the City’s position in international finance. Observers have noted how New York is probably the bigger rival to London’s pre-eminence, rather than Frankfurt or Paris; and London is also heavily dependent on the large US-based investment banks for its critical mass, and they are making threatening noises about Brexit. Clinton, with her background as a New York senator, may understand their mind-set better than most.

As with Donald Trump, or any other inhabitant of the White House, she will have to cope with a Congress packed with sectional and industrial interest groups whichever party the members nominally belong to. That is always a difficulty. The UK’s problem is that a President Hillary Clinton wouldn’t pick a fight with the Congress over this particular issue, and has little incentive to move Britain up the list of things to sort out in the early part of her term of office. Under her husband and under President Obama, the Democrats have had an uneasy relationship with British Conservatives, who sent advisers to try and defeat the Bill Clinton campaign in 1992. Barack Obama, a former Chicago community activist, meanwhile, never seemed to quite hit it off with the Eton-educated David Cameron (though he and the Queen obviously have a mutual admiration). So though 2017 could see women leaders in the Bundeskanzleramt, the White House and Number 10, their gender is about all they share.

Clinton is far more cautious on tax cuts and balancing the budget (or rather reducing the deficit) than Donald Trump, and she has lots of creative ideas on boosting women’s engagement in the economy and helping small business, but she is a little short on the big picture of where she wants the numbers to go. She certainly wants to make the wealthy and large corporations pay their “fair share” of tax. This would, in the short term at least, help reduce America’s deficit and build a more equal society. Longer term it might hurt incentives, depress investment and stifle entrepreneurship, and thus depress tax revenues and widen the budget deficit – an old debate in American economics. It all depends on the impact a 30 per cent tax rate on incomes in excess of $1m would have – an unknowable proposition. If the tax revenues are used to boost long term productivity by investing in infrastructure, that is something that would help the US and the world economy longer term. She might also take a softer line on migration – again usually counted as a positive for the economy (whatever the politics of it may be). Certainly the Trump Wall with Mexico wouldn’t boost the US economy by much, though the concrete firms would enjoy the bumper order books.

Still, if markets and business prefer stability to radical change, then Clinton is the one who would be more likely to reassure them, and ease the US economy gradually onto a more stable footing. In that case this large market for UK exports – more than £30bn a year – would be more secure than otherwise; but by the same token it might not grow so fast as it might with a more radical “Trumponomics” approach.