What will a 2017 General Election mean for SMEs?

posted by 4 years ago in News

Just as voters are coming to terms with the reality of a 2017 General Election following Theresa May’s snap announcement this week, so too is the small business community.

The Prime Minister’s U-turn on holding an early election comes as British companies are facing a range of issues including rising inflation and low productivity rates. Add to that major changes on the horizon as Brexit negotiations are thrashed out over the next couple of years and it raises the question of how much more uncertainty our country’s small businesses can take?

So, what will a General Election mean for SMEs?

Open discussion

No matter what side of the fence you are on, a General Election will certainly throw open debate about policies and issues affecting workers and small business owners in the UK. Issues such as productivity, investment, growth, wages, tax and late payments should all be up for discussion with businesses being given a voice.

In response to the Prime Minister’s announcement of her plans to call a General Election Stephen Martin, Director General of the Institute of Directors, said:

“Businesses are having to get used to being buffeted by the changing winds of politics at the moment, and will just have to endure yet another campaign. This must be used as a chance to properly debate what leaving the EU means for the long-term future of the UK, including how we continue to bring in the skills employers need.

“While Brexit will inevitably dominate the campaign, there are also much wider questions that need to be addressed on the changing nature of business and work, automation and our ageing society. These can’t be ignored in the run up to June 8, and the business voice must be heard in this crucial discussion.”

A distraction from EU negotiations

Since the Prime Minister’s announcement, concerns have been voiced that the election is coming at a time when all efforts should be firmly on planning Britain’s future outside the EU. This is particularly crucial if small companies are to benefit from a robust and ambitious trade agreement.

Director General of the British Chambers of Commerce, Adam Marshall comments:

“Many business communities will understandably be concerned that attention will inevitably shift from the economy and the intricacies of leaving the EU to a potential election campaign. Firms will want to be reassured that the key challenges facing the economy will be front and centre throughout any election period.”

A stronger mandate for Brexit negotiations

Theresa May’s justification for calling an early General Election was to secure a strong mandate to add weight to her Brexit negotiations.

The Prime Minister said:

“We need a general election and we need one now because we have at this moment a one-off chance to get this done while the European Union agrees its negotiating position and before the detailed talks begin.”

Think-tank the Centre for Economics and Business Research said a Conservative victory on June 8 could bolster economic and political stability, encouraging firms to invest and supporting economic growth.

Market volatility

There was concern that the Prime Minister’s decision to go for a snap General Election would spark further volatility on share and currency markets.

It was reported that the pound jumped on the news, but shares fell.

The FTSE 100 was down more than 2%, while sterling rose 1.2% against the dollar to $1.272.

It’s been widely predicted that there may be greater volatility in the value of sterling between now and June but that it would strengthen if the government got the decision they are hoping for and were in a stronger position to negotiate.

A commitment to British businesses?

Carolyn Fairbairn, CBI Director-General, said:

“As EU negotiations now get underway, firms are clear about the serious risks of failing to secure a deal and falling into World Trade Organisation rules. It is vital that negotiators secure some early wins and all parties should commit to working to ensure businesses can continue to trade easily with our EU neighbors, while seeking new opportunities around the world.

“Whoever forms the next Government, they should seek to build a partnership between business and government that is the best in the world, based on trust and shared interest.”