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Democracy 2 Pollsters 0

Peter Elston, CIO, Seneca Investment Managers, says:

What a truly extraordinary year! For pollsters however it has been an utterly miserable one. Politics is being shaken up on both sides of the Atlantic, but the polling industry must now surely change the way it gauges voters’ intentions, as distinct from what voters say when questioned. Clearly many voters were too shy to admit that they wanted out of Europe or supported Trump.

Both results appear to reflect deep discontent among large swathes of the respective electorates that the so-called establishment on both the left and the right chose to ignore. Income and wealth inequality has been rising across the globe, and many of those affected have associated this with immigration policies that they think are broken. Both Clinton and Cameron were guilty of failing to grasp this.

What a Trump presidency will look like is hard to say, given that the campaigning focused so little on policies. Is Trump really as vindictive as many believe he is or will he turn out to be an effective dealmaker and unifier? He has certainly played a blinder of a hand, no doubt helped by widespread distrust and dislike of his opponent.

Economic growth tends to be inversely related to economic inequality. If President Trump can fulfil his promises to America’s lower income groups then there might be a case for becoming more positive on America’s – and thus the world’s – longer-term growth prospects. This means that whilst there has been a negative response from financial markets to Trump’s victory in the short-term, they could quickly recover. But this is far from certain, particularly since the Republican Party is traditionally the party that favours higher earners. What is certain is that pollsters are having an annus horribilis.