The Economy

Obama Win Gets Thumbs-up From U.K. Finance Pros

But at least one economist offers him words of warning.
Andrew SawersNovember 7, 2012

LONDON — Relief. That’s the one-word answer that you most commonly encounter when asking finance professionals in the United Kingdom for their reaction to Barack Obama’s reelection.

In part that feeling comes from a sense of continuity, in part from alarm about the rhetoric deployed by challenger Mitt Romney. And partly it’s because everyone is just glad to have the election over and done with, even if it means nothing much has changed. But Obama isn’t going to have things all his own way — not on Capitol Hill, and not with China.

Eric Anstee is a former CFO of Eastern Electricity and onetime CEO of the Institute of Chartered Accountants in England and Wales. Now he is CEO of City of London Group, an investment-management firm. “My immediate reaction is positive to Obama’s reelection, as it provides continuity and stability [with regard to] the U.S. economy as it impacts Europe,” he says. “And a change in President would have meant wholesale staff changes. New people would have needed time to assess [the situation]. This result maintains the momentum.”

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Brian Welch, director of The UserCare Treasury Consultancy, makes a similar point. “I have watched the U.S. Presidential elections with a mixture of interest and horror. Overall, I am pleased that President Obama has been reelected for a second term, as he is a known quantity and can ‘get on with the job,’ whereas, had Mitt Romney been elected, he wouldn’t have been inaugurated until January, and it would have taken a further six months for him to meet other world leaders, and generally to get into the job.”

Welch worried about the “extreme economic line” Romney had taken. “I am therefore encouraged by the result,” he says. He cautions, however, that “after next year, with a hostile Congress, this Administration will start to run out of steam with everyone focusing on the next Presidential candidate.”

Ken Sutherland, director of finance and business services with National Farmers Union, a financial-services group, is more sanguine about Romney’s policies. “Even if Romney had won, I think he may have been more moderate than his party and his rhetoric, although no doubt there would have been pressure to cut taxes and spending,” he says. “Commodity prices will continue to be driven more from China. The UK’s biggest problem remains the euro zone.”

Staying the Course
Bryan Foss spent most of his career with IBM and now is a senior nonexecutive director and chair of the audit committee at Motive Television and a visiting professor at Bristol Business School. Says Foss: “Consistency of approach [under an Obama Administration] will . . . help continuity of U.S. trading relationships.”

He applauds the intensive use of technology during the election, “including the use of social media, big data analytics, mobile, and more. Although U.S. communications companies may now suffer from a postelection drop in expenditure, they should now be better prepared to exploit the same technologies for business purposes and benefit.”

Consultant David Kern, who is also chief economist of the British Chambers of Commerce, says of Obama: “He will enjoy an initial period of political goodwill, which he should use to secure agreement with the Republicans in the House in order to avoid the risks of a fiscal cliff. But he will have to demonstrate greater ability to compromise than in the past. There is a risk that victory may make him more stubborn.”

Kern is one of the few finance experts to speak with CFO European Briefing today who expressed some concern about Obama’s policy agenda: “In the longer term, the result reduces the chances that the U.S. will adopt market-friendly policies aimed at encouraging enterprise, competitiveness, and greater productivity,” he says. “The prospects for sensible long-term policies to reduce the U.S. structural budget deficit are not very promising.”

Savvas Savouri, a partner and chief economist at Toscafund, a hedge-fund manager, acknowledges, however, that he got Obama wrong four years ago. “I must admit to being convinced he would go down as a one-term President, that his reelection chances would be undermined by serious internal economic shocks hitting during his first term. Fast forward to November 7, 2012, and I have to accept . . . embarrassment.”

Andrew Sawers is editor of CFO European Briefing, a CFO online publication.