Theresa May’s aim in calling a snap election was to increase the Conservative party majority and strengthen her hand in the Brexit negotiations. The surprise result has meant that not only is the UK political landscape thrown into uncertainty, but on a wider scale it calls the outcome of the Brexit negotiations into question. In consequence, business leaders are facing a significant challenge. The CBI business lobby group called this a “serious moment for the UK economy.” Brexit is top of the list of priorities for many, with the Institute of Directors demanding a focus away from political rhetoric and towards productive Brexit talks. The manufacturing organisation the EEF felt that it was time for a “careful rethink” of the planned negotiation strategy.
Experts believe this result means that a hard Brexit is less likely, but the outcome is far from clear and all predictions should be taken with a pinch of salt. This, in addition to a weakened government means that business owners are facing a period of sustained uncertainty. Even if parliament pulls together to deliver successful Brexit negotiations, another General Election may be on the cards sooner rather than later which will lead to even more uncertainty on top of the short-term result of fluctuating currency.
It may be harder to predict the future without a clear manifesto or statement of intent, but this doesn’t mean that business leaders are entirely at the mercy of the political landscape. The prospect of a softer Brexit could be a positive sign for companies that trade internationally. The fluctuating value of the pound does present a challenge, but the right foreign exchange strategy can mitigate the risk in this area to an extent. This approach – essentially proceeding with caution – can apply to most areas of business. Growth is still possible in uncertain times but what is clear is that companies need to develop a robust financial plan in order to remain on a firm footing through times of unprecedented change.
Even businesses that do not operate in Europe will be watching parliament closely. Promised developments such as improved infrastructure and connectivity are a priority and may get lost in the clamour to successfully deliver Brexit. On a more positive note, the government will be more reliant on a range of disparate voices; the lack of a strong majority means that the government will be more reliant on external support and will not be as able to push through unpopular measures. This means SME owners do have the chance to exert more influence on certain issues. Plans such as the Making Tax Digital initiative may face delays due to the political uncertainty, but it is likely that the changes are inevitable in the long term. It’s important for business owners to continue to look to the future and, where possible, plan for anticipated changes in both the political and regulatory environment. Such uncertainty does present a challenge for business owners, but as in all periods of change, this may also be an opportunity.