Trump's Election Victory Has Only Minor Effects on Europe – Except with Regard to the Export Economy

The US economic policy changes pursued by the Trump administration will have rather small effects on EU Member States with regard to economic growth, consumption and investment. This is the result of a survey conducted by the Centre for European Economic Research (ZEW) among around 200 financial market experts as part of the Financial Market Survey in December 2016. An exception forms the export economy, where a clear majority of 59 per cent of respondents expects to see negative effects.

Responses have been much more ambivalent regarding long-term interest rates. In view of the US rate hike, 35 per cent of the experts expect Europe to follow suit.

When asked about the economic development in the USA, a vast majority of the respondents – almost 86 per cent – expect Donald Trump's inauguration as President to have positive effects on growth. In this context, public spending, private consumption, and private investment are seen as the main drivers. By contrast, the majority of the experts expect to see a reduction in US foreign trading activity, which in turn will hamper economic growth as well as lead to a greater focus on domestic economy.

Trump's forthcoming presidency is clearly associated with a negative development of US national debt: 66 per cent of the surveyed experts forecast a further increase in the already high US government debt level. It is therefore not surprising that around 50 per cent of the experts expect long-term interest rates to rise, and 44 per cent of the respondents expect an additional rise in short-term interest rates.

For further information please contact

Dr. Michael Schröder, Phone +49(0)621/1235-368, E-mail schroeder@zew.de