Dec 15, 2019 - Economy

Global economic uncertainty eased by U.K. elections, China trade deal

UK Prime Minister Boris Johnson

U.K. Prime Minister Boris Johnson. Photo: Lindsey Parnaby WPA Pool/Getty Images

Two of the biggest constraints to the world economy — uncertainty about Brexit and the China trade war — were alleviated last week, Bloomberg reports.

Why it matters: With a "phase one" deal between U.S. and China staving off more tariffs and the United Kingdom now on pace to leave the European Union on Jan. 31, the outlook for global growth should be more positive in 2020 after being hampered by widespread uncertainty in 2019.

What they're saying: Ben Emons, managing director for global macro strategy at Medley Global Advisors in New York, told Bloomberg: "The China trade deal and U.K. election result have taken out a major tail risk overhanging markets and companies."

  • "Business confidence should see a large boost that could see a restart of global investment, inventory rebuild and a resurgence of global trade volume."

Yes, but: The New York Times' Peter Goodman writes in a new analysis that the Conservative victory in Britain has dealt another blow to globalism, paving the way for a new era of trade dominated by nationalism.

  • "The decisive Conservative victory in Britain leaves no doubt that in today’s global equation, national interests are supreme and globalization is suspect."
  • "[A] new era is underway in which national interests take primacy over collective concerns, with trading arrangements negotiated among individual countries."

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