The Global Ripple: How the Recent Political Changes Have Affected the World
Tiger Resourcing Group
Independent Recruitment Agency Specialising in IT, Engineering, Defence, Security, Space Systems and ITS
1. Labour’s Influence on the Economy
2. Analysis of the New UK Budget
3. Trump’s Return to the White House and Potential Impact
4. Insights for the Tech Sector and Recruitment Trends
1. The UK Labour Market Outlook: Navigating Shifts and Opportunities
The National election on 4th July 2024 brought in a new Labour government in a landslide vote after 14 years of a Conservative Government. The 17th of July also brought us the King’s Speech, setting out the new government’s legislative programme. What does this new legislation mean for the UK, and globally?
UK Impact: With Labour’s focus on improving public infrastructure and upskilling the workforce, companies might see increased support for training initiatives, especially those focusing on sustainable practises and digital skills. This could encourage the technology sector and help recruitment firms attract appropriate talent for an evolving job market. These commitments to digital transformation in the public sector echoes priorities across Europe and the U.S, signalling strong demand for tech talent in roles supporting public infrastructure improvements.
However, Labour’s proposed regulatory measures, including the zero-hour contract ban, and the introduction of day one rights, could mean increased operational costs for some sectors, affecting business forecasts and investment strategies. Business groups have expressed concerns that increased costs associated with these increased worker protections could deter firms from hiring, particularly in an already fragile economic climate. The Office for Budget Responsibility has previously described the UK’s productivity slowdown as “catastrophically bad” for the economy. If Labour’s reforms lead to higher operational costs without a corresponding increase in productivity, the impact on economic growth could be harmful. The uncertainty surrounding the introduction of the employment rights bills could also lead to a more cautious approach from companies, which would slow down hiring and capital investment until there is greater clarity on the regulations.
Potential Global Impact: The Kings Speech said that Labour would seek to reset the UK-EU relationship, without the UK returning to the single market or customs union. The manifesto said a Labour Government would instead strive to improve the UK-EU trade and investment relationship.
Labour’s green policy initiatives align with the EU’s Green Deal. Labour is said to be exploring how to align the UK’s carbon market with the EU, both in terms of Emissions Trading Systems (ETSs) and carbon border adjustment mechanisms (CBAMs). This could potentially foster stronger collaboration with European countries on climate targets. Additionally, this could also open doors for more cross-border green tech projects and partnerships, impacting industries in renewable energy, electric vehicles, and sustainable infrastructure.
2. A look at the New UK Budget
The recently declared UK budget outlines a series of fiscal changes in response to global inflationary pressures and the economic impact of recent global events. Key factors include increased funding for green energy projects, enhanced healthcare and education spending, and tax relief for certain business sectors, with a view to reducing reliance on traditional industries and attract global investments.
Global Impact: For European and American companies, this budget could spark fresh competition and collaboration opportunities in the renewable energy sector and tech innovation. E.g., EU companies with sustainable tech expertise might find an expanded market in the UK, while U.S investors may be incentivised to explore UK ventures to diversify their green portfolios.
Impact on the Technology Sector:
The budget includes incentives for tech start-ups and support for R&D initiatives, reflecting a drive towards digital innovation. For Tech-based recruitment, this could translate to a higher demand for specialists in AI, renewable tech, and cybersecurity. However, with the adjustments to capital gains tax (10% to 18%, and 20% to 24%), and corporation tax, some larger tech companies may reassess investment plans, possibly affecting hiring growth in this area.
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3. Trump’s Return to the White House
While this development is primarily, US focused, Trump’s previous tenure highlighted his approach to international trade and immigration policies, which had ripple effects on the global economy, including the UK.
US potential impacts- Trump will inherit an economy already on relatively solid footing. Inflation has slowed and wages have begun to catch up with higher prices. Despite the signs of strength in the economy, the cost of living and overall dissatisfaction with the economy was considered the top concern by voters. Among Trump’s economic plans are deporting millions of immigrants, putting sweeping tariffs on all goods coming into U.S, encouraging more oil production, lowering corporate taxes and eliminating social security income and tips.
Tariffs- Imposing tariffs of 10% on all goods imported for overseas, and 60% imported from China, would likely raise prices and lead to job losses, according to economists, business groups and even some Trump allies. This was rejected by Trump, in saying that it would encourage companies to move their plants to the U.S, creating jobs, and boosting output and sales for U.S. producers, improving the GDP of America.
Inflation- With a promise to defeat inflation, Trump has made it clear that he would allow houses to be built on federally protected land and cut regulations for builders, to lower housing costs and increase supply. A boost in housing supply would be highly advantageous to the economy, through an increase in job opportunities from construction, market stability, enhanced social mobility and greater disposable income to inject into the local economy. The intention to lower costs overall by reducing energy prices by 50% has also been made clear. This has been argued to be unlikely, as oil producers are already reaching record pumping levels, and are restricted by limits on labour and infrastructure. An increase in supply in the market would also drive down the price, discouraging companies from flooding the market.
Immigration- The proposal to undergo the ‘largest deportation in the history of our country’ has been claimed to help the economy by freeing up the housing and opening jobs for U.S citizens. Business groups have warned though, that deporting millions of immigrants could create a labour, driving prices up. Researchers at the University of New Hampshire found that a mass deportation of immigrants could reduce the U.S. economy, as measured by GDP, by as much as 6.2% or about $1.7 trillion in lost productivity.
Taxes- Trump has proposed several tax cuts, including the abolition of federal income tax, benefitting individuals and the economy with increased consumer spending, stimulating demand, business investment and job creation, and increased competitiveness for corporations. On the other hand, this could affect the wider economy with an estimated increase in the deficit by $4.1 trillion according to the University of Pennsylvania.
Space Policy- Donald Trump has revealed Elon Musk is to join his cabinet, to lead the Department of Government Efficiency. Musk's involvement has been argued to potentially draw conflict-of-interest criticism, given that the billionaire's various businesses could stand to benefit from the decisions that he helps make. " Tesla gets government funding and has received millions to install EV charging stations. His rocket company SpaceX has won billion-dollar government contracts for moon missions. And his satellite internet company, StarLink, has also gotten millions in subsidies from the federal government," NPR noted. This could mean that the Space and ITS Sectors may be experiencing some significant developments going forward, benefitting the market and potentially requiring a new pool of specialised skills to aid innovation.
A Trump-Musk partnership has also been considered to further advance the commercialisation of space. Musk is a big advocate for more deregulation of new technology, from artificial intelligence to space activities, potentially challenging existing safety and security standards with Musk most likely to push for cost reduction, innovation and efficiency
UK and EU potential impacts: Trump’s “America First” philosophy could lead to more protectionist measures and stricter trade policies that may impact UK-U. S trade relations, especially post-Brexit. This could slow exports for UK companies reliant on the U.S. market, particularly in finance, tech, and pharmaceuticals. As Trump has hinted at revaluating trade agreements, UK leaders may seek alternative trading partners to balance potential restrictions.
European markets may prepare for more challenging U.S relations, potentially leading to reduced imports and exports. Should tariffs increase, we may see a shift towards more EU- focused supply chains, particularly in sectors like automotive and manufacturing. UK businesses with ties to both U.S and EU markets may face renewed pressure to carefully navigate these shifting trade landscapes.
If U.S tech firms decide to expand internationally or increase remote hiring, there may be a rise in demand for UK talent. Alternatively, should Trump’s immigration policies tighten, talent mobility between US and UK could decrease, prompting UK-based tech firms to focus on local talent pools or explore partnerships within the EU.
Currency fluctuations due to market reactions to U.S Policies can also impact investment in UK Businesses, altering their hiring capacities and compensation standards.
4. Technology Sector and Recruitment Insights
Market Shifts and Opportunities:
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