Forget Brexit – this is what will happen to the world economy if Donald Trump wins the US election

Unless there is something quite shattering in tonight’s TV debate between Hillary Clinton and Donald Trump, Clinton is overwhelmingly likely to become the next US president. Ahead of the debate the odds put that at an 80 per cent chance, while the possibility of any other outcome is simply not factored into the financial markets at all. The only market that jumps around whenever the possibility of a Trump victory nudges up a little is the rate for the Mexican peso; a Trump presidency is not seen as bullish for the peso.

But this apparent calm is itself a worry. If people are not prepared for a political surprise, they are liable to react violently should it occur. We have seen something of that in the UK over the past four months. So what can sensibly be said – from an economic perspective – about the US under the next president? Ten thoughts.

One, this is an economy that has grown solidly since the great recession, and which is starting to get pretty close to pull capacity. In cyclical terms, some sort of slowdown should be on the horizon, though the severity of the last downturn suggests that recession is less likely than in previous cycles.

Two, despite nearing full capacity, the US is still running a fiscal deficit of 3.2 per cent of GDP. There is no obvious scope for a looser policy.

Three, the plans of the two candidates are utterly different: huge cuts in taxation from Donald Trump; modest rises in taxation at the top end under Hillary Clinton. But you have to take all such plans with a pinch of salt. For, as in that adage “the president proposes but congress disposes”, fiscal policy will be largely determined by the legislators, not the administration.

So, point four, it is safe to assume that the US deficit will remain high, maybe growing a bit, through the next four years. Financial markets will have to feel comfortable with that, probably bidding up long-term interest rates as a result.

And if that is right, the present era of ultra-easy money will draw to a close. If long rates go up, the Federal Reserve will put up short rates. Already the market expects this, and the debate is about when and by how much it increases rates, not about whether.

This will affect the rest of the world. In the short-term the dollar is likely to get stronger. If you have spare cash better to have it earning some interest in dollars, rather than none in euros or yen. In the long-term, rates around the rest of the world will be pulled up too.

Seven, there is a danger, much greater under Trump than under Clinton, that US support for free trade will weaken. Globalisation is seen as working against the interests of ordinary US workers. Disruption of US trade with China is quite possible – maybe not a trade war, but a cooler relationship eventually leading to slower growth worldwide.

Whoever wins will have to lead a deeply divided nation, not just socially, politically and geographically – we all know that – but also structurally. This is not just a Wall Street/Main Street thing. What is happening in the high-tech industries of the West Coast is utterly different from just about everywhere else. These structural fissures will in all probability widen over the next four years.

Other countries, notably China and Russia, will want to test the new president. For whoever wins, that will be seen as an opportunity to advance their interests against those of the US. We could see a very bumpy 2017.

And, finally, those bumps are likely to be much greater under a Trump presidency than under a Clinton one. Since the former outcome is not factored into most people’s thinking it would be particularly disruptive. But even a Clinton victory would not be a recipe for calm. The tensions within the US economy will see to that.