Why business trumps politics...

AMERICA carries a lesson for the British business community, and it is a simple one: the more anguished the politics, the more you focus on the practical tasks of running the show and the more successful you will be.

Washington is intensely political. Everyone here in the US capital is trying to figure out how the results of the midterm elections will change policy. Having the Republicans losing control of the House of Representatives – but increasing their majority in the Senate – gives endless grounds for debate.

But the one thing people are agreed on is that the President will not be able to get through any substantial legislation in the next two years.

For business that is fine, at least for the moment. The US economy has had an amazing run, piling on growth, piling on jobs. Unemployment at 3.7 per cent is the lowest for 49 years. That has happened irrespective of who is in the White House, though Donald Trump characteristically claims the credit.

Despite the chaos in US politics, the profits of the top 500 companies, those in the S&P 500 index, are up 25 per cent on the year before. The big question now is the durability of the boom.

There will be pressure from rising interest rates, with another increase expected next month, and there will be disruption from the continuing shift of retailing to online. But these have little to do with politics. The one big political initiative of the past two years, Donald Trump’s attempts to refashion trade relations with the rest of the world, has had much less impact than these.

Therein lies the message for the UK. Our politics will be at least as chaotic as America’s for the foreseeable future, just as they have been for the past two-and-ahalf years. Our growth has been somewhat slower than the US, though the latest third-quarter figures last week were encouraging and this week we may well find unemployment has continued to fall.

The thing that really matters is not the wrangling in Westminster but how the world economy performs. Will there be another global downturn and if so, when? How do companies cope with disruption in retailing? How do we foster the growth of our own high-tech companies, potential stars of the future?

As for angst over Brexit, consider this. The very worst case projections I have seen, the ones that say there will be a recession next year in the event of a breakdown in talks, are not forecasting anything like as deep a downturn as that of 2009.

As long as the world economy keeps growing, we will be pulled along by it. Disruption is never good, but business needs to remember that there are much bigger forces at work than our changing relations with Europe. IT LOOKS as though Amazon is coming to Washington, or at least to its northern Virginia suburbs on the other side of the Potomac River. Amazon has been seeking a location for a second headquarters, alongside its original base in Seattle. It will create 10,000 to 20,000 jobs so cities all over the land have been bidding for the deal.

The choice is apparently now down to Dallas in Texas, somewhere in the New York region, or the Washington metropolitan area. People here think the capital has won. There is one troubling conclusion, with ramifications for the UK: only large urban areas were in the race. To provide the infrastructure, the talent pool, the communications and the many other services a big business needs, the city has to be big. So successful cities become more successful, while secondtier ones languish.

In the UK, we see that with London’s growth having outstripped the rest of the UK for years. So what’s to be done? There are two things. One is to accept the growth in London and put in the housing and infrastructure to cope. The second is to encourage secondtier cities (Seattle was in that camp in 1994 when Amazon was founded) to build on any activity where they have strength. This means using the local university and existing businesses to create vibrant hubs. Only then will the likes of Amazon be attracted to Manchester, Birmingham and other parts of the UK.

What matters is not Westminster... but how the world economy performs