Your commercial news round-up: US election, interest rates, UK house prices

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As Tuesday 5 November marked the 60th quadrennial presidential election in the US, the world awaited the results with bated breath. In this week’s commercial news round-up, we outline the impact of Donald Trump’s re-election on lawyers across the world and take a look at US shares, the dollar and predictions for the UK’s economic growth. Plus, we provide an update on the Bank of England’s (BoE) decision to cut interest rates; and the state of house prices in the UK.

• Donald Trump will become the next US president after passing the threshold of 270 electoral college votes.
  
  Lawyers across the world have forecast that Trump’s next term as US president could bring about heightened trade tensions and more work for Big Law. In the Americas, it’s expected that his presidency could result in "a new phase of instability [to Latin America] given the protectionist and one-sided view of the relationship with Latin America”, according to Juan Francisco Torres Landa, a partner at Hogan Lovells in Mexico City. Elsewhere, there could be a change in relations between China and the US after Trump said he'd increase trade tariffs, especially in China, if he was to be re-elected. Dayo Okusami, a partner at Nigeria's Templars, stated that rivalry between the US and China could intensify in Africa, “especially focused on critical minerals and their supply chains, as Africa holds 30% of the world's known reserves of critical minerals”.
  
  Meanwhile, lawyers in Europe are anticipating disruptions to trade and deal-making, with clients facing periods of “uncertainty”. Spanish lawyer Iván Delgado said: "European and Spanish companies may face a more fragmented and uncertain adaptation period, which might require legal advice that is more focused on risk mitigation, particularly in sectors such as automotive, agriculture, and manufacturing, where tariffs or trade restrictions could directly impact supply chains and market access, as well as commercial dispute management.” Plus, Jessie Gaston, a partner at Orrick Herrington & Sutcliffe LLP in Paris, believed that interest rate reductions in Europe and the US election, “regardless of who won”, would “stimulate business activity that has been delayed or put on standby since the beginning of the year”.

• Elsewhere, US shares hit record highs on Wall Street, the dollar was up by around 1.65% against currencies including the pound and euro, and bitcoin hit an all-time high with the news of Trump’s re-election. The pound and the euro fell 1.16% and 1.89% against the US dollar, respectively, and bitcoin value rose by more than $6,600 to $75,999.04. The National Institute of Economic and Social Research has also predicted that economic growth in the UK would slow to 0.4% in 2025, down from a forecast of 1.2%.

• Sticking with UK economics, on Thursday 7 November, the BoE cut interest rates for the second time this year from 5% to 4.75%. BoE Governor Andrew Bailey explained that while rates are likely to “continue to fall gradually”, they can’t be cut “too quickly or by too much”. Chancellor of the Exchequer Rachel Reeves said the cut will be “welcome news” but also added that she’s “under no illusion about the scale of the challenge facing households after the previous government’s mini-budget”. The BoE has warned that last week’s budget announcements will see inflation creep higher but rates won’t reach previous highs. According to the Office for National Statistics, as of September 2024, the inflation rate in the UK was 1.7%.
   
• The interest rate cuts will also see those on tracker mortgages (around 600,000 people) experience an immediate reduction to their monthly payments, while those looking for a new mortgage deal unlikely to find cheaper rates straightaway given that lenders factor in predicted interest rate cuts in advance. Elsewhere in the housing sector, Halifax has reported that the average UK house price reached a record high of £293,999 in October. Although these prices are expected to continue to rise over the next few months, the bank also warned that mortgage costs could stay at a higher rate for longer.

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