Business confidence plunges in wake of election result
A poll of 700 members by the Institute of Directors (IoD) has shown a “dramatic drop” in confidence among Britain’s business leaders since the recent general election resulted in a hung parliament.
12 June 2017
Confidence among Britain's business leaders has plummeted since the general election left Prime Minister Theresa May's Conservative government with no overall majority in parliament.
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Peter Sands, former ceo of Standard Chartered and co-author of the report, told the BBC that all 50 companies questioned were concerned about potentially rising costs from tariffs and customs controls, while many were also worried about the UK leaving the EU without a deal at all.“When it comes down to it most would prefer to be in the single market – that makes it easier for them to do business, and if they can't get that they want a free trade agreement or something as close to the single market as possible,” he said.
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Brexit negotiations scheduled to begin next week
Although Mrs May plans to soldier on with the backing of 10 MPs from Northern Ireland's Democratic Union Party, a poll of 700 members by the Institute of Directors (IoD) showed a “dramatic drop” in confidence amid the political uncertainty, especially as Brexit negotiations with the rest of the EU are scheduled to begin next week.Coinciding with the survey was a call from the Confederation of British Industry (CBI) for the government to give business a place at the Brexit negotiating table.The IoD survey found a negative swing of 34 points in confidence in the UK economy from its previous survey last month. While 20 per cent of company directors remained optimistic about the economy over the next 12 months, 57 per cent were 'quite' or 'very pessimistic'.Dramatic impact of political uncertainty
“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy,” said Stephen Martin, IoD director-general.“The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new government.“It was disheartening that the only reference the prime minister made to prosperity in her (post-election) Downing Street statement was to emphasise the need to share it, rather than create it in the first place.“With global headwinds and political uncertainty at the front of business leaders' minds, it would be wise for this administration to re-emphasise its commitment to a pro-business environment here at home.”Desire for a speedy agreement with the EU
The survey also found that, despite the political impasse, there was no appetite for another general election. Instead, company bosses said they wanted a speedy agreement with the EU on transitional arrangements surrounding Brexit, and clarity on the status of EU workers in the UK.A separate survey of medium-sized businesses and trade associations by the Harvard Kennedy School of Business found that “almost all” expressed a preference for remaining in the single market and customs union.Related news:
- Analysts cast their votes on UK election outcome
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Peter Sands, former ceo of Standard Chartered and co-author of the report, told the BBC that all 50 companies questioned were concerned about potentially rising costs from tariffs and customs controls, while many were also worried about the UK leaving the EU without a deal at all.“When it comes down to it most would prefer to be in the single market – that makes it easier for them to do business, and if they can't get that they want a free trade agreement or something as close to the single market as possible,” he said.
Time to 'change tack' with Brexit negotiations?
Meanwhile, Carolyn Fairbairn, director-general of the CBI, demanded the government to “change tack” in its approach to the Brexit negotiations due to begin next Monday.Writing in the Financial Times, she said, “With negotiations almost upon us, British business does not believe that we are where we need to be. The likelihood of a good deal for the UK is further away with every exchange across the Channel. That cannot be allowed to continue.”Ms Fairbairn said growth was reliant on the government keeping Britain an attractive place to do business and that, unless a business-friendly deal was arrived with the EU, increasing numbers of investors would look elsewhere.“There is no question this is already beginning to bite: a gradual drip, drip, drip of lost investment and missed opportunity,” she wrote. “For the sake of our economy and the prosperity of our regions, it is time change tack.”For related news and features, visit our Brexit section.Access hundreds of global services and suppliers in our Online Directory Get access to our free Global Mobility Toolkit ©2024 Re:locate magazine, published by Profile Locations, Spray Hill, Hastings Road, Lamberhurst, Kent TN3 8JB. All rights reserved. This publication (or any part thereof) may not be reproduced in any form without the prior written permission of Profile Locations. Profile Locations accepts no liability for the accuracy of the contents or any opinions expressed herein.
