The dollar nosedived this morning, giving the pound a relative boost, as it became clear Donald Trump had won the US general election.
However, despite the immediate reaction of the markets, the election result could see increased infrastructure spending in the US.
Alan Breen, a senior stockbroker with investment firm Cantor Fitzgerald, said the election result could see more work for the civil engineering sector.
“So far it’s very light on detail. Coming from their comments throughout the election campaign, both (candidates) were adamant about increasing infrastructure spending. To put it into context, the US highways and bridges five-year act passed last November was only for $305bn [£245.6bn], but Trump has talked in trillions. It’s only headlines and light in detail, but it is encouraging,” he said.
Two weeks ago Trump revealed a plan to put $1 trillion (£805bn) into US infrastructure, perhaps including the infamous suggestion of constructing a wall along the Mexico border.
According to the Washington Post, the idea is that Congress would to authorise $137bn (£110bn) in tax credits for infrastructure firms to build new toll roads, toll bridges and other projects, and then the firms would get their return via the toll revenue. According to Breen, it means investors might see infrastructure firms and suppliers as a good investment.
During his victory speech in the early hours of this morning (9 November), Trump said: “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none.”
The falling dollar has seen a relative rise in the pound, which has suffered post Brexit with some damaging effects on the civil engineering sector.
Association for Consultancy and Engineering economist Brian Nolk said that although the dollar has taken a hit, it remains to be seen whether it will sustain.
“The dollar has taken a pretty sharp knock. That always has an implication for dollar based commodities and contracts. It remains to be seen whether the knock will be sustained or whether the inherent strength of the US economy will comfort investors,” he said.
“My own view is people should not overreact to what was a bit of a political shock and until we get a bit of clarity on what Trump will say and do regarding policy.”