Introduction
Elections shape the political landscape and can have profound implications for businesses. With the UK general election poised to take place on 4 July 2024 now is a key time for businesses to consider the potential impact a change in government might have on their operations and future success.
From regulatory changes and fiscal policies to shifts in market confidence and international trade relations, the outcomes of general elections can either bolster or challenge business environments.
This article explores the potential impact the upcoming general election may have on businesses and how they can minimise disruption before the results are even announced.
What changes might impact businesses?
Each political party has distinct priorities and as they publish their manifestos it is clear that they will adopt different approaches to business regulation.
A Labour government will prioritise social welfare and worker rights. For businesses, this could mean increased operational costs (but perhaps a more motivated and productive workforce).
A Conservative government is likely to focus on creating a business-friendly environment by reducing red tape and offering tax incentives. Businesses may benefit from lower corporate taxes and less stringent regulations, fostering a more conducive environment for growth and expansion.
- Fiscal Policies - Changes to taxes which impact corporations directly affect business profitability. Lower taxes can leave businesses with more capital to reinvest, potentially stimulating economic growth. Different governments inevitably prioritise public spending in different sectors. Increased spending on infrastructure can benefit construction and related industries, while investments in education and technology can spur innovation and skills development, beneficial for high-tech industries.
- Market Confidence and Stability - A decisive election result, whether favouring stability or promising economic reforms, can boost investor confidence. Conversely, a hung parliament or prolonged coalition negotiations may lead to market volatility and uncertainty, impacting investment decisions. Election outcomes can also cause fluctuations in the value of the pound. A stable and predictable government might strengthen the pound, while political uncertainty could weaken it, affecting businesses engaged in international trade.
- Trade Relations and Policies - Trade policies are particularly susceptible to changes post-election, especially post-Brexit. Businesses involved in import-export need to stay attuned to these changes to navigate tariffs, trade barriers, and regulatory requirements effectively.
What can businesses do to prepare?
Even before the results are announced, a general election can have an immediate impact on the economy. It is prudent for businesses to consider how to prepare for a potential change in government as soon as possible. That could include:
- Reviewing and adapting risk management plans - Flexibility is key when considering how different political scenarios may impact a business. Contingency planning in the event of economic fluctuations will enable businesses to continue to thrive during times of uncertainly. Considering and discussing the potential outcomes outlined in this article early on can help with developing robust contingency plans.
- Diversification of revenue streams – Depending on a single sector to generate revenue can expose businesses in the event of market / economic changes. Exploring new potential revenue streams and markets will help reduce the negative impact that policy changes may have on key markets.
- Communication – investors, employees and customers will inevitably have some concerns about the impact of the election on certain businesses. Early and transparent communication with key stakeholders about how the businesses have prepared for both the election and the result can help alleviate any pre & post-election concerns.
Conclusion
An election's impact on businesses can be multifaceted and wide reaching. Businesses should remain vigilant and adaptive to these changes, planning proactively to leverage new opportunities and mitigate potential risks.
As political landscapes shift, so too must the strategies and operations of businesses, ensuring resilience and sustained growth in a changing economic climate.
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