What Trump winning the US election could mean for UK mortgage and interest rates

The UK, like the rest of the world, has had all eyes upon the results of the US Presidential election which now see news channels confirm Donald Trump as the winner.

The man himself had declared an early victory and received congratulations from world leaders including our Prime Minister Kier Starmer but what many British viewers may not realise is that the result in America might impact them too. That could be the case whether Republican Trump's Democrat rival Kamala Harris ended up in the White House but, depending upon what the new president does when in power, our own finances are set to be impacted in some way or another, reports The Mirror.

Ahead of the results, some economists believed that with a Trump victory the US gross domestic product (GDP) would be lower and US inflation would be higher, due to his higher import tariffs and lower immigration policies. Paul Dales of Capital Economics told i newspaper that the funds rate from the US Federal Reserve would be 0.5 percentage points higher than otherwise.

He said: “That would put some upward pressure on UK gilt yields and mean mortgage rates for UK households are a bit higher than otherwise. A more inflationary global environment may mean the Bank of England cuts interest rates by less than otherwise.” If the Bank of England were to cut interest rates by less, this could mean that mortgage rates stay higher for longer.

Investment bank Peel Hunt has been considering the possible impact upon UK stock markets and companies based here, which can affect those who own shares or have them through an ISA or their pension when it is invested in equities. Or there can be a fall-out from companies if they are negatively impacted.

Peel Hunt thought whether Harris or Trump won, their policies would have “far-reaching consequences for the global economy and financial markets", adding: "On balance, both pose downside risks."

Looking at both candidates’ policies, its head of research Charles Hall, head of transport research Alexander Paterson and chief economist Kallum Pickering believed that overall they “involve a series of anti-growth measures that - if enacted - could impair US economic performance and create risks for financial markets.”

Peel Hunt said: “The US remains the most systemically important global economy. As a result, a lurch to more radical policies would create major ripple effects across the globe and international financial markets." It said it had so far only considered the initial effects of the candidates’ platforms but the result of the proposed policies, if they came into force, would depend upon the reaction of other countries.

One policy singled out is Trump's threat to impose tariffs upon imported goods to the US. Peel Hunt’s analysts suggested those impacted by such tariffs could include Nottingham-based Games Workshop, with the US representing around 40% of its sale, and mixer drinks maker Fevertree as the US generates 32% of group sales and currently imports about 70% its products.

Tariffs could also dent transport companies such as British Airways owner IAG with its Trans-Atlantic routes; Ryanair and Wizz Air. Jet fuel is priced in US dollars, so any negative currency reaction to the election result could push up airlines’ costs.

Ahead of the results, Peel Hunt anticipated that if Kamala Harris won then America’s corporate tax rate could jump. Oil and gas companies no doubt also have been closely watching the outcome.

Peel Hunt said a decarbonisation policy had emerged as a top election issue in the US and that: “A Trump victory could lead to a loosening of climate targets". This could then prolong the dominance of oil and gas, as the build-out of renewable energy and low-carbon alternatives might lag behind government targets, it said.

And defence firms could be among those impacted. It said that, while both Trump and Kamal had plans to increase defence spending, "Trump plans to reduce or eliminate assistance for Ukraine, which may have implications for global security".