Return of Donald Trump could have an impact on Telford & Wrekin Council finances – report claims

The council’s need to operate a balanced budget means that millions of pounds are put aside in various approved bodies so that it can plan its cash flow through the year.

A meeting of the council’s Audit Committee next Wednesday (Jan 29) will be told that the council’s treasury management function is “critical” to the smooth running of the council.

It is affected by rises and falls in interest rates, and investments in government bonds, and it takes expert advice on the likely direction of the economy and at geopolitical risks around the world.

The papers state that the council’s policy is first and foremost to ensure its cash flow, but it also gets an investment return. Last year that was 5.1 per cent.

“Donald Trump’s victory paves the way for the introduction/extension of tariffs that could prove inflationary whilst the same could be said of further tax cuts and an expansion of the current US budget deficit,” says the report to councillors.

“Invariably the direction of US Treasury yields in reaction to his core policies will, in all probability, impact UK gilt yields.

“So, there are domestic and international factors that could impact rates whilst, as a general comment, geo-political risks abound in Europe, the Middle East and Asia.”

The council also uses treasury management policies to fund its multi-million pound capital programme.

Telford & Wrekin Council is estimating that it will have £15 million in total treasury investments at the end of March 2025, and £420 million in total external borrowing in place at the same time.

Councillors will be asked to approve limits to borrowing at the meeting next week.

Council advisors at Link Group forecast the next reduction in the Bank of England Interest Rate will be made in February and for a pattern to evolve whereby rate cuts are made quarterly.

They add: “Following the October 30 Budget, the outcome of the US Presidential election and the Bank Rate cut undertaken by the Monetary Policy Committee (MPC) on November 7, we have significantly revised our central forecasts for the first time since May.

“In summary, our Bank Rate forecast is now 50 basis points (0.5per cent) to 75 basis points (0.75 per cent) higher than was previously the case, whilst our PWLB forecasts have been materially lifted to not only reflect our increased concerns around the future path of inflation, but also the increased level of Government borrowing over the term of the current Parliament.”

The report states that the council can remain flexible to the changing economic circumstances.