Business organisations in Swindon and across the West of England today warned of damaging uncertainty following the shock General Election result and the impact of a hung Parliament on key issues for the town, particularly on the imminent Brexit negotiations
Business West, the region’s largest business group, said there would be widespread concern about more and more uncertainty and delays in the Brexit process.
James Durie, of Business West – which runs the Swindon & Wiltshire Initiative – said: “When you think that Theresa May had committed us to start the initial Brexit talks in just over a week’s time, the political earthquake that has now erupted must put a big question mark over the whole Brexit negotiation.
“Will the opening Brexit talks actually go ahead on Theresa May’s timetable? Will she even be prime minister by the end of today? Or even in a few days?”
Last week Business West warned in its General Election manifesto that leaving the EU without a deal would cause “considerable damage” to many businesses and avoiding this outcome “must be a priority” for all candidates.
And he said a recent survey of members had revealed how frustrated they were with the lack of information on the ongoing Brexit process.
“They will be even more annoyed that our government’s standing will be at rock bottom with the EU now that Theresa May’s credibility has been shattered by the General Election result which she totally focussed on Brexit.
“Calling a snap election with just eight weeks to give herself a stronger hand in the EU talks was a big gamble which the British people have clearly rejected.
“Never underestimate the electorate is an old adage used by experienced politicians and today they have confounded expectations.”
There would now be more frustration for businesses with the prospect of the initial Brexit talks being further delayed, possibly by a Tory Party leadership contest.
Speaking before Theresa May announced she is to form a pact with the Democratic Unionist Party to allow her to continue to govern, Mr Durie said of the Prime Minister: “How can she retain any credibility with the EU, having had her wish for a stronger mandate for Brexit well and truly torpedoed?
“For a lot companies in Bristol & the West of England, where the strength of the pound is a big issue to make them more competitive, the lack of urgency created by a hung Parliament could well impact on their profitability for quite a period.
“The key word here for companies is: confidence. From day one when David Cameron committed us to an ‘in or out’ referendum, confidence has been the key issue raised with us by business.
“In our experience, few companies have had much confidence in the government’s secretive Brexit process and during the Prime Minister’s election campaign it certainly became no clearer.
“And at the heart of the government’s poor showing in the general election was that the British public rejected the Prime Minister’s hard-line focus on getting the best deal for Britain.
“It failed with a lacklustre election campaign and most voters did not understand her Brexit argument.”
He said business had been largely ignored in the election campaign.
“That has to change and quickly and whoever now leads the country has to understand that the whole Brexit process will not be successful unless companies are regarded as important passengers on the journey – they must not be left standing on the platform.”
Richard Mathews, managing director at Swindon accountancy firm Regulatory Accounting – part of regulatory and compliance consultancy RFS Group – said a hung Parliament was unlikely to be good for business as it would lead to uncertainty over Brexit negotiations and the governance of the country.
“The markets had anticipated a Conservative majority. In the absence of this, there is uncertainty and the markets, and business in general, do not like uncertainty,” he said.
But he added that it was likely that Making Tax Digital – the plans by HMRC to require businesses and the self-employed to provide digital information quarterly – would be back on the agenda, and implemented under its original timetable.
He added: “One area to watch is social care and how this is going to be funded. Could it mean further changes to Inheritance Tax?
“In general, it seems there has been a rally against the current austerity measures continuing and if the new government decides to loosen its grip it is difficult to understand how additional funds can be made available without considering how taxes generally are calculated and collected.”
Institute of Directors South West chairman Nick Sturge said businesses had expected the election to put aside uncertainty – but it had delivered more.
“We need party politics to be set aside and have strong and visionary leadership. Brexit is of course a key issue but not the only one on the table,” he said.
“We now face the significant possibility of both another general election and also at least one leadership election. So, neither will we be rid of party politicking nor have much leadership.
“Perhaps it will allow some peace from stark election promises and therefore less charged discussions over Brexit, and some commitments to some of the key questions troubling businesses such as the right to remain of current EU residents.”
He said the governing parties and Prime Minister needed to work closely with business of all sizes to understand where it stood on key areas such as transport, energy and broadband infrastructure, ensuring the education system was ready for the changing face of work and looking at any tax system reforms needed to boost long-term competitiveness.
“Even if taxes do go up, we have a lot of catching up to do to take pressure off our critical infrastructure such as the NHS and schools,” he said.
The South West, with its strength in sectors such as digital, tech and creative industries, enjoyed a reputation for entrepreneurialism.
“Our startups need the support to scale up if we are going to remain competitive. I hope our newly elected combined authority Mayor and the Local Enterprise Partnerships across the rest of the South West will be making the case on a national platform at every opportunity to support and stimulate inclusive economic growth,” he said.
Gordon Isgrove, regional senior director at international property consultants GVA’s South West office, said: “Whilst today’s result may not be the outcome the markets had expected, we urge all parties to act as a unified front to secure the best deal for the UK in exiting the EU and provide much needed stability and clarity for the markets and confidence for UK and overseas investors.
“In the South West we need to continue to plan for growth and to alleviate our housing shortage. All parties recognise the housing problem in the region and we need them to work together to resolve and not consistently and systematically object to proposals in their constituencies. In addition, the South West needs to shout louder to get a better share of funding for strategically important infrastructure.”
