Gold Silver Up, Shares Down, Unemployment Up, Starmer Greenland Headache

Donald Trump has maintained the hardline rhetoric that the USA must control Greenland.  Greenland is a semi-autonomous territory within the Kingdom Denmark; it is therefore also a member of the EU and of NATO.  Think of it like England, Scotland, Northern Ireland and Wales, all part of the United Kingdom of Great Britain and Northern Island.

Imagine Donald Trump saying that Scotland must be controlled by the USA?  Imagine how the Scottish people would react let alone the British Government and the World? That is what is happening now.

Geo-political uncertainty has pushed precious metals to new records and slashed between 1-4% of Western stock markets in just 2 days.  Additional tariffs on any country backing Greenland and not the USA may rise by 10% on 1^st February and then an additional 15% to take additional tariffs to 25% very on 1^st June.  This could mean tariffs on UK exports to the USA at 35% (10% already).  Europe would be hit harder, and it is why German car manufacturer shares have plummeted by 4%.

The has all put markets in turmoil with many investors rushing to ‘safe havens’.

Comment

Trump may be in a ‘win, win, win’ position.  The US:

• Wins on increased income from tariffs if applied or
• Wins on Greenland possession but the EU is making noises to stand up to Trump so
• Wins again if the UK/EU defers to Trump and actually spends much more on defence for NATO and Greenland. 

Perhaps this is the strategy?

That said, the EU is the USA’s biggest ‘customer’ for many exports and services, in particular, tech (both hardware and software).  Imagine Amazon, Google, Apple, Microsoft, Boeing, pharmaceuticals, Jack Daniels, oil power (US has been replacing Russian supplies to EU), minerals, and Hollywood all getting smashed by EU reciprocal tariffs?  EU companies also employ around 4m in the US.  This could be some economic ‘tussle’ and inflation will no doubt climb.

In the UK, with unemployment up again after Rachel Reeve’s ‘disaster’ Budget back in Autumn 2024, imposing faster than inflation rises of over 20% to minimum wage for 20 year olds, 6% for over 21s as well as that 15% hit on employers national insurance contributions and now the ‘doomsday’ Autumn 2025 Budget with massive hikes in business rates, Prime Minister Keir Starmer has ‘nowhere to go’ and has a real headache to cure. 

We can only try to make sense of the position as successive governments, be they red or blue, have left the UK utterly defenceless and spending 5 X as much on benefits as we do on defence with one of the World’s largest proportion of benefits bills payable when compared to GDP.  France is still the worst for this at 35% of GDP paid out in benefits so, no wonder France is in a worse position than the UK.

Is it time for both the UK and EU to toughen up?  Cut benefits spending for working aged people that are physically able to work?  If they won’t work then it must be National Service or Civil ‘Service’ for their benefits i.e., contribute to society?  Is it time to spend more on defence and have a big enough military force to contribute more significantly to NATO defence and therefore Greenland? 

We appreciate Trump’s argument that Greenland is virtually defenceless (except the weather), Denmark has done nothing,  EU has done nothing,  UK has done nothing, Canada has done nothing,  NATO collectively has done nothing. 

We are not trying to be political here, we want stability, we want a safe place to live and we want peace, but as with all bullies, whether at school, in Russia, in USA, in the Far East or in UK/Europe, bullies must be stood up to.  A quote from the film Darkest Hour: “you cannot reason with a tiger when your head is in its mouth”, was not a real quotation by Winston Churchill to the War Cabinet (just a film) but a superb illustration that we all have to be stronger and more resilient and plan way before it is too late in all walks of life, including our financial planning.

We do hope the EU and UK agree to increase defence spending, commit to a joint and fair share for NATO defence of not just Greenland but globally and then a return to economic and investment market stability across Europe and further beyond.