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General Election Week 4 – European and US chaos

Western politics is going through a right old white knuckle ride moment. Both sides of the Atlantic are embroiled in some wild political madness which is ‘short term easy’ but ‘long term difficult’ to see how they play out. How so?

The chaos that has descended on continental Europe in the wake of the European Parliament elections two weeks ago is a sight to behold. The Belgian government has disintegrated. Macron has called national Parliamentary elections in France, and in the last few days France is enduring the sort of ‘peak Brexit derangement’ we lived through during 2016-9, daily madness upon madness piling on top of each other. To keep up to speed with the chaos in French politics at the moment you need to check the news on an hourly basis. The march of the hard Right across European capitals is being witnessed. And it’s having an impact.

Short term, it's clear that we will have more governments in continental Europe that will have a hard Right membership and thus a more anti-immigration and EU-sceptic flavour. Where this leads longer term is more tricky to judge. Is this a ‘flash in the pan’ voter knee jerk reaction? Is it a here today gone next year phenomenon? Or indeed is this the significant change in European politics that has been talked about for some time? This is really difficult to discern right now.

And across the Atlantic in the US things look as if they're heading towards a Trump victory, at least on paper right now. The first Presidential debate between Biden and Trump is crazily early in the cycle, next week on 27th June. That will be a sight to behold, an angry braggard beating a fumbling OAP to death perhaps; either great viewing or too painful to watch, you take your pick. If Trump does indeed win the election, in the short term we sort of know what to expect as it is ‘Trump: the sequel’. But where does this lead? The Democrats in the Trump era have moved further and further to the Left. Do they tack back to the centre ground post Trump? What does the Republican Party look like post-Trump, who are their leaders?

There is no doubt that we're watching some form of slow motion political car crash on both sides of the Atlantic, and perhaps rather faster motion in France at the moment. Where does this all end up? Our clients need to make investment decisions with some feel for the future, short, medium and longer term. And truthfully, it's really tricky to see what may play out as the options are wide open.

Amusingly, one of the positives of Sunak's crazy early election call, is that the UK election will be settled by early July. With continental European chaos still probably building at that point, and peak US political chaos still to arrive on the scene, this autumn the UK may look like a really safe and stable place to invest!

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