What Does It Mean for Small Business?
“Events, dear boy, events.”, is what Harold Macmillan is supposed to have replied to a journalist who asked him what a Prime Minister feared most. He could hardly have imagined that a sitting Prime Minister would ever manipulate her own series of events, in such an explosively, disastrous way as we are witnessing now! But here we are and many businesses, small and large, are wondering where the recent election leaves them.
Well, we don’t know! But what we do know so far, is this;
Two reports on business have been released this week. One of the two reports, from the Harvard Kennedy School of Business, has shown that businesses in the UK are not convinced that losing access to the single market can be bettered or even replaced by trade relationships with new markets. In fact, the study found that even a 5% reduction of exports to Europe would need to be matched by a 28% increase in exports to the rest of the world to work.
The Harvard Kennedy report, headed by Peter Sands (previously of Standard Chartered) and Ed Balls (previously of Strictly Come Dancing), revealed that all the companies taking part in the report were very concerned about the rising costs of tariffs and customs controls that seem inevitable.
A second, and separate survey, from the Institute of Directors, claimed that 57% of members were pessimistic about the “disastrous consequences” the current political uncertainty would have on their businesses. The head of the IoD, Stephen Martin, said, “The needs of business and discussion of the economy were largely absent from the [general election] campaign, but this crash in confidence shows how urgently that must change in the new government.”
What are the Signals?
Business leaders who were called to meet Business Secretary, Greg Clark, on Friday, are apparently hopeful that this new atmosphere in Westminster will lead to a toning down on the ‘Hard Brexit’ that appeared to be inevitable when Theresa May held a slim majority.
Another indication that this might be the case came from Moody’s (one of the three credit rating agencies) this week. While they indicated that the UK’s credit rating would be downgraded following the election result, they also suggested that this would lead to the ‘softer’ Brexit favoured by business.
Finally, the DUP (the Northern Irish party the Conservatives are currently negotiating a ‘confidence and supply’ agreement with) are clear they will not support a hard border in Northern Ireland. All of which seems to point to a ‘Soft Brexit’.
This could be the breath of fresh air that businesses have been gasping for. However, it will depend whether you were a Leaver or Remainer, as to how big a gulp you will want to take! In the meantime, all we can do is literally keep calm and carry on. Let’s get the kettle on!