It goes without saying that this month’s general election in the UK came as quite a surprise. The Conservative party managed to come out with a slight majority, despite all previous signs pointing towards a hung parliament. This of course means that the incumbent government will now be able to make more decisive decisions than they may have been able to previously, and we may see more significant changes than were made by the previous, weaker coalition government. Traditionally, the Conservative party has marketed itself as being best for business and the economy as a whole, so let’s take a look to see if this might be true.
The first indicator would indeed suggest things are good. Both the FTSE and sterling have made reasonably good gains over the last couple of weeks, suggesting that investors and businesses alike are pleased with the election outcome. This mainly reflects the opinion of big business though – how will smaller ones be affected?
Thankfully, the Conservative party has already agreed that it will not raise VAT, National Insurance or income tax, which is good news for small businesses. VAT can make products more expensive, or cuts into profits, and higher personal taxes can mean that wages need to be raised to remain competitive.
Small Business Manifesto
The government also included a section of their manifesto targeted squarely at small businesses, which includes things like improving start-up initiatives, making internet connectivity better, and generally improving infrastructure.
This is a very controversial topic, but may well be a benefit for some employers. Some in the Conservative party want a real overhaul of UK employment legislation, with the headline-grabbing statement being that employers should be able to dismiss their employees at will, rather than the current system where it can be difficult to sack people. The argument is that this will make things more competitive with the US, where employment rights are far more lax.
This is probably the biggest one – a healthy and growing economy is good for the businesses within it, because more people will spend more money, and financial institutions will be more likely to lend money. This is down to reduced risk, which is also likely to make insurance easier to acquire for some of these business considerations.
There’s more information about what the Conservative government means for small business to be found in this article, but you should make up your own mind about whether you think it’s a good thing or not.