City financiers brace for trade disruptions
A Warning Bell Tolls: The Impact of Trump's Trade War on Big UK Businesses
The steamrolling trade war initiated by Donald Trump is sending shivers down the spines of Britain's major corporations. NatWest's chief, Paul Thwaite, sounded the alarm, predicting a pause in activity among some leading UK firms as Trump's trade brawl hammers confidence.
NatWest reported a whopping 36% increases in profit for the first quarter, hitting £1.8 billion, but Thwaite acknowledged that the brewing trade storm is causing a dent. With Trump's "Liberation Day" announcement last month casting a shadow over global economic networks developed over decades, CEOs are gearing up for turbulence.
HSBC and Standard Chartered have already issued similar warnings. HSBC's chairman, Sir Mark Tucker, warned about the serious potential risks to global growth, labeling the situation as potentially disastrous, while Standard Chartered has signaled a more fragmented global outlook due to the trade war.
Thwaite reported a mixed bag when it comes to the overall impact on customers. While arrears remain low and corporate and household borrowers show resilience, he pointed out that larger corporations, heavily dependent on global trade, are giving their investments and corporate finance activity a pause, with many in a wait-and-see mode.
Smaller businesses and households appear less affected, concentrating primarily on domestic matters and showing no significant changes in behavior in response to recent volatility. They're taking stock and waiting it out, primarily when it comes to investment decisions, investment activities, and corporate finance activity.
For the first quarter, NatWest got a boost from a surge in mortgage lending, thanks to borrowers rushing to complete house purchases before the stamp duty went up on April 1st. With this, the bank expects to deliver income and returns for the year at the upper end of its guidance. Shares rose 1.3%, or 6.2p, to 482p.
Overall, while there are potential opportunities for large UK corporations to adapt and diversify, the impact of Trump's trade war is expected to be negative, with increased costs, market instability, and potential damage to financial stability.
Insights:
- Impact on Investments: Investors need to be mindful of the effect that the trade war may have on their portfolios and consider diversifying their investments to mitigate risks.
- Importance of Adaptability: Large UK corporations need to stay adaptable and flexible in order to weather the economic storm brought about by the trade war and maintain their market competitiveness.
- Resilience of Smaller Businesses: Smaller businesses and households seem to be proving more resilient to economic shocks, focusing on domestic matters and showing less volatile behavior in response to global turbulence.
- Strategies for Long-term Success: Companies should consider long-term strategies for continued success in the face of mounting economic uncertainty, including diversifying supply chains, negotiating with suppliers, and exploring alternative markets.
- Public Opinion and Politics: It's worth noting that public opinions towards Trump's policies may play a role in the duration and severity of the trade war, as pressure from the public can shape politicians' actions and decisions.
- The ongoing trade war, spearheaded by Donald Trump, is causing UK businesses to reconsider their investing activities and corporate finance due to the dampened confidence.
- HSBC's chairman, Sir Mark Tucker, has issued a warning about the potential risks to global growth, asserting that the situation could potentially be disastrous for the economy.
- Smaller businesses and personal-finance entities appear less affected by the trade war, focusing on domestic matters and demonstrating resilience in their behavior towards recent market volatility.
- For investors, it's crucial to consider diversifying their portfolios to minimize potential risks arising from the trade war and safeguard their investments.
- In the face of uncertainty, large corporations should strive for adaptability and flexibility to maintain market competitiveness and navigate the economic difficulties brought about by the trade war.
- With a probable negative impact on financial stability, UK businesses need to explore opportunities for long-term growth strategies, such as diversifying their supply chains, negotiating with suppliers, and exporting to alternative markets.
