Trump unleashes animal spirits to boost US: but British businesses face ‘slow death’ under Labor

Donald Trump has unleashed “animal spirits” in America, while businesses in Britain face a “slow death” following Labour’s tax rises, business leaders have warned.

As US stock markets approach record highs, City tycoon Sir Martin Sorrell said the president-elect has boosted business morale across the Atlantic.

And Goldman Sachs CEO David Solomon welcomed the prospect of “a kind of playbook of higher growth” from the new management.

Instead, business sentiment has plummeted in Britain after Rachel Reeves used her first budget as chancellor to announce tax rises worth £40bn.

Insolvency expert Ric Traynor, head of restructuring group Begbies Traynor, yesterday warned of a wave of UK business bankruptcies in the coming months as companies are hit by the tax raid.

The comments underlined the stark difference in mood in the United States and the United Kingdom following Trump’s election victory and Labor’s budget.

The political and economic turmoil in Europe – with Germany and France in crisis and the euro falling – has further exposed the transatlantic divide.

Julian Jessop, economics fellow at the Institute of Economic Affairs think tank, said: ‘Trump and his new team have real business experience and can sell a compelling narrative about the economy.

‘The contrast with Keir Starmer and the new UK government could not be starker.

“Labor ministers have spent most of the year belittling the economy and seemingly doing everything they can to undermine the confidence of households, businesses and investors.”

Trump has promised to cut taxes for businesses and individuals and reduce bureaucracy.

But Ashley Alder, chair of the UK’s Financial Conduct Authority, warned of the “clear dangers” of a regulatory “race to the bottom” under Trump.

And his threat to impose tariffs on products from China, Mexico, Canada and Europe has sparked fears of a damaging global trade war.

Some observers believe, however, that this rhetoric is a negotiating tactic to secure a better deal for the United States when it returns to the White House.

Jenny Johnson, CEO of Franklin Templeton Investments, said: “Trump is a dealmaker. America needs China and China needs America.”

Corporate America lit up on so-called ‘Merger Monday’ earlier this week, when US companies agreed to nearly £30bn in deals, including the mega-merger of advertising giants Omnicom and Interpublic.

Sorrell, 79, chief executive of digital advertising group S4 Capital, which previously built WPP into the world’s largest advertising business, signaled a change in mood since Trump’s election victory.

“In the second Trump era, what we are seeing is a huge increase in what I call animal spirits in America,” he told the BBC.

‘The feeling of deregulation that Trump is generating means that the agreements and the North American market are large and strong. Deal mania is on the rise.”

Goldman boss Solomon said: “If you talked to CEOs across the American corporate landscape, they would say that in recent years the regulatory environment was an obstacle to growth and investment.”

And it looks like we’re going to swing that pendulum back a little bit. Most CEOs I talk to, when I talk to our clients, they are excited about the prospect of bringing that change back.”

But experts fear that many businesses in Britain will struggle to survive Labour’s tax rises.

Traynor warned that some face a “slow death” over the next six months following a £25bn increase in employers’ National Insurance contributions.

He added: ‘Insolvencies in the UK remain at high levels. Businesses are facing continued demand pressures and cost challenges, including the recent post-Budget cost rise.’