The gulf is as wide as the Atlantic. And nowhere was it more apparent than when Donald Trump delivered his video address to the self-styled global elite at the World Economic Forum in Davos.
While the return of The Donald has reignited ‘animal spirits’ in corporate America – he yesterday promised the largest tax cut in US history – doom and gloom has descended across Europe.
Political turmoil reigns supreme in France and Germany while the Labour Government has slammed the brakes on the UK economy with £40billion of tax rises.
The mood is ‘not good’ in European boardrooms, according to Goldman Sachs’ Richard Gnodde, the London-based chief executive of the US investment bank’s international division, who believes executives on this side of the Atlantic will call on governments to be more pro-growth.
‘There’s an increasing sense of frustration and I wouldn’t be surprised if we see that community broadly becoming much more assertive,’ he told Bloomberg TV in Davos.
‘Assertive with the regulatory framework, assertive with Brussels, in their own domestic capitals, because I think everybody knows what the programme needs to be. I think people are done with talking.’
To make matters worse, Gnodde noted, ‘they can see what is happening in the US’ where Trump yesterday promised to cut the corporate tax rate from 21 per cent to 15 per cent for companies that manufacture goods in America.
‘My message to every business in the world is very simple: come make your product in America and we will give you among the lowest taxes of any nation on Earth,’ Trump said.
He bemoaned the high tax rates in Europe, and again threatened punishing tariffs. ‘The EU treats us very, very unfairly, very badly,’ he said.
The audience listened with a mixture of fear and bemusement. The President was greeted with polite applause as he dispensed his wisdom from four huge screens around the forum’s congress hall.
But there were also bursts of laughter as he embarked on his customary combination of digressions, boasts and threats.
Forecasts from the International Monetary Fund this month underline the divide between Trump’s America and Europe.
While the US economy is set to grow by 2.7 per cent this year, the UK is on course for just 1.6 per cent. Germany is expected to eke out growth of just 0.3 per cent following two years of decline.
Christine Lagarde, president of the European Central Bank, said it was ‘not pessimistic’ to say Europe faced an ‘existential crisis’.
Asked if the election of Trump represented a wake-up call for Europe, she admitted: ‘I respectfully think that it does.’
UK Business Secretary Jonathan Reynolds, who is in Davos with Chancellor Rachel Reeves, saluted Trump’s ambition and admitted Britain must do better at getting things done.
He stopped short of saying the UK should be more like Trump, a figure loathed by many in the Labour Party. But he told reporters that ministers must make ‘difficult choices to get things going’.
‘The sense here is the scale of, whatever you think of the inauguration speech, the ambition there, the galvanising effect that has had,’ said Reynolds.
The comments chime with Reynolds’s and Reeves’s drive to show they are committed to growth above all, by signalling support for a third runway at Heathrow and ousting the head of the competition regulator.
Reynolds added: ‘There are major problems with how long it takes to build infrastructure in the UK. The delays to get stuff done – that adds cost, that adds uncertainty.
‘I think there is a test in most countries of the western world: people asking: “Can government deliver for me? Can it address the issues?”
‘And I can see that as part of the pitch that he was making. And I also detected a very optimistic message in a sense. It would be wrong to say we should be more like Trump.
‘But we do have to show people that government can make a positive difference to their lives, get homes built.’
Judging by the collapse in confidence among investors, businesses and households since Reeves’s £40billion tax raid, that may take some doing, particularly given what is on offer in Trump’s America.
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