Does US election matter to us?

 
President Barack Obama

My colleague Stephanie Flanders, who knows miles more than I do about American politics, will doubtless write the definitive piece about what Obama's re-election means for the US and global economy.

I would just make a few bloomin' obvious points (please don't say "as always").

First, what happens to the American economy matters to us. One of the statistics that never fails to surprise me is how well British businesses do in America: we consistently have a trade surplus with the US.

In the words of the Office for National Statistics' Pink Book on trade, "there has been a current account surplus with the USA in all years for which data are available" - which was typically less than £5bn before 2000, but reached a peak of £23.4bn in 2005, and was an impressive £21.9bn last year.

We make the stuff and create the services that America wants, and - unlike China - without being accused by the failed contender Mitt Romney of manipulating our currency to gain an unfair advantage.

If only we didn't buy so much more from Germany, China and Norway than we sell to them (curses), the massive net indebtedness of our economy might actually start to reduce a bit.

Within Britain's balance of payments, the US is Britain's most important trading and investment partner, accounting for 18% of current account credits and 14% of debits in 2011.

Or to put it another way, economic conditions in what remains the world's largest single economy have a material impact on our prosperity.

Which is why for the British government, and the Chancellor George Osborne, what matters more than the choice of a president is that in the coming weeks the US legislature finds a way of steering America away from the so-called fiscal cliff.

Our Chancellor of the Exchequer, who in December will resist pressure to loosen constraints on public spending (the so-called "spending envelope" will not be increased, which means that any increase in public-sector investment will be financed by cuts elsewhere), is alarmed that backstop measures to reduce America's public sector deficit are draconian - and, if implemented, would force the US (and probably Britain) back into recession.

Doubtless the shadow chancellor Ed Balls will be muttering about pots and kettles. But he would probably agree that this would not be the ideal moment, with the UK economy sluggishly recovering, for our most important export market to shrink.

So the Treasury is hoping that a reinvigorated President Obama will somehow persuade a House of Representatives - whose Republican majority has been enlarged - to over-ride the prescribed $600bn of tax increases and spending cuts, due to be implemented on 1 January, with a gentler fiscal consolidation package.

Securing Congressional agreement won't be easy.

And one final thing when it comes to the British national interest: for us, almost as important as the choice of president is the selection of a Treasury secretary, which is especially so at a time when reforming the global financial system remains work in progress; and no one seems to have a clue who will replace Tim Geithner.

Update 16:05 GMT

Now that the counts are in, it is clear that the Republican majority in the House of Representatives has fallen a bit.

 
Robert Peston, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
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    Comment number 154.

    I think it is vital for the world Economy that the US continues to grow. They need to address the deficit but if the US were to adopt a similar approach to the UK and drive the US into recession it would be disastrous.

  • rate this
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    Comment number 153.

    @149 John_from_Hendon

    What you say is certainly true, but that doesn't imply that states are destined to fail. Although perhaps individuals are. This may make me an idealist, but as I cautioned I'm not an imperialist. What the modern state, with its history in tow, looks like, and how it can better represent its people will always be a work in progress: if it represents its people.

  • rate this
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    Comment number 152.

    I'm interested in how differing govt timespans can drive different behaviours. The goal must surely be to encourage long term strategy? Is Obama now either a lame duck or is he free to be more radical? China goes for a 10 year strategy and has no overt opposition to argue the toss over day to day issues (like our media seems to revel in). Contrast also Norways long term policy for oil revenue...

  • rate this
    0

    Comment number 151.

    Comrade@147
    In 4 years time, whatever happens in Washington and elsewhere future US elections are now decided along racial lines. Evidence, see the % of black and hispanic voters that put Obama in and the distribution of minorities in the individual states. My guess is the next Democrat leader, probably a black or hispanic person, has about 200 seats without turning up in 2016.

  • rate this
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    Comment number 150.

    UU and JfH

    On statehood, nations and order, perhaps you are both looking at the issue from too narrow a perspective... Without dismissing as obvously good/bad, consider something else:

    http://www.bbc.co.uk/news/magazine-19929620

    http://www.bbc.co.uk/news/magazine-20178655

  • rate this
    +1

    Comment number 149.

    144. Under-Used

    Consider how much evil is done in the name of the states that you believe in so much!

    There is a certain logic in the belief of the Caliphate rather than what has become of the states after the collapse of the Ottoman Empire (as successor of the Roman Empire in the East). Are these states so good for their peoples?

    Our states in the West haven't worked too well either!

  • rate this
    +1

    Comment number 148.

    Robert a question a bit 'off thread' but valid from a fee payer.

    Why did the BBC send every 'talking head' in the Current Affairs and News Departments to the USA ?

    More professional perceptions with less exposure was made by other UK TV channels utilising a handful of US experts with the 'contacts'.

    Is the BBC Current Affairs Dept more 'persona non grata' in the US than here?

  • rate this
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    Comment number 147.

    Obama's re-election represents a holding position for the US electorate. The choice of national figurehead is a statement of desires and intentions. The US decided they do not want to move to the political right.

    Voters had a choice: stay as they are or move right. They chose the former.

    In four years time, what will their choice be? Left or Right? Or Right or Further Right?

  • rate this
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    Comment number 146.

    Robert the simple answer to your question is NO how many air miles have been clocked up to presnt programmes about politicians who mean little or less to us, I personally could not give a damn about American politics. Who cares about Mitt Romney as long as does not get into power, what an idiot. Maybe another GW and go and bomb a country he knows nothing about, let them fight their own wars !

  • rate this
    -1

    Comment number 145.

    141.PW

    The President is mostly a figurehead of course. I would say you are right in terms of the executive role, but you ignore the long term affect on policy and influence on legislation. Obama is the status quo, but Romney would've been a lurch further right.

    "Does Cameron 'follow' Obama?"

    As your say, politicians are much of a muchness. Blair went into Iraq with Bush...

  • rate this
    0

    Comment number 144.

    @136 John_from_Hendon

    I don't want to sound like some sort of imperialist, and in many regards the big state/ small state question is a false dichotomy. Any community needs authority, even anarchist doctrines provide a framework of authority. My concern is that a small state is one in which the individual is subsumed, even irrelevant. I believe in nations, in order.

  • rate this
    -2

    Comment number 143.

    UNREPRESENTED AND LOCKED OUT,yes the other candidates that where kept out of view of the mass media kept of ballot papers bye big money from wall street,1,2billion dollars manoh man,
    thats democracy a #### farce any way thats it folks 4 more years of looney Tunes

  • rate this
    -1

    Comment number 142.

    Interesting to notice the attendance of Bob Diamond at the Republican (party?). Are Democrates excellent judges of character?
    President Obama can now continue his focus on us, all and together. Rather than the republican me,me,me!
    Does that message matter to us............?

  • rate this
    0

    Comment number 141.

    140 ComradeOgilvy

    Yes as I said the events and the economy influence us but not so much the man in the Whitehouse. As in the UK the difference between them is more in rhetoric and presentation than actual policy where. particualry with regard to the economy, there is only a little wriggle room. Do our leaders 'follow' the president of the USA. Does Cameron 'follow' Obama? Are you sure?

  • rate this
    +2

    Comment number 140.

    139.PW

    "I am a little disappointed that the UK media was so obsessed with the America presidential race."

    Really? They may be far away, but the events in the US will affect our politics, our economy and who we're told to invade next. It's important to know who our own leaders follow.

  • rate this
    0

    Comment number 139.

    Yes the US economy is important to the UK but this would be the case whoever won the election and the challenges facing the new president. whoever won, would be similar. I am a little disappointed that the UK media was so obsessed with the America presidential race.

  • rate this
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    Comment number 138.

    131. purple "I am certain it can all be blamed on the UK. Naughty England."

    Where does one start with such a statement! Are you writing about the UK or England or both and suggesting that England dominates the UK (without it being a democratic political entity itself!)

    So who dominates England? The City of London for whose benefit the UK,England(outside the city) is subservient.

  • rate this
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    Comment number 137.

    124. kenny b
    The USA seems important 'cause it used to be OURS. Whereas the bits of the EU you mention owned us (gave us monarchs etc.)!

    Puritanical religiosity in the UK is also a factor - we expelled our religious extremists to form the USA - and they kept up with their extremism!

    But you are of course correct. Our near neighbours matter a great deal more to us than the lost empire.

  • rate this
    0

    Comment number 136.

    125. Under-Used

    The rise of the nation state in recent time has without doubt been the cause of much conflict. This is understood by historians who choose too look at such things. There is little difference between members of the human race. We all need and wish for the same things, yet a combination of religion (see Crusades etc) and nation states led to such things as the need for passports.

  • rate this
    0

    Comment number 135.

    Lots of countries are facing a fiscal cliff including the USA, UK, Japan and many continental European countries.
    I can't see how these countries can stop themselves falling off the fiscal cliff.
    Should they not all declare themselves bankrupt and start again?
    If they did this what would be the implications?
    Would it work?
    Alan

 

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