Snap election = more uncertainty for business

We’re always being told that the one thing businesses hate the most is uncertainty. But will the decision to call a snap general election for June 8 make that better, or worse?

It depends, of course, on which side of the political fence you currently sit. Wrekin MP Mark Pritchard has described Theresa May’s decision as ‘bold, gutsy and intrepid’.

Her opponents, however, have a slightly different take on it, seeing it as a chance to install what Jeremy Corbyn describes as ‘an effective alternative’.

Nathan Rowden, from the Shropshire Star, pointed out that only last week the newspaper carried out a poll asking reader if Jeremy Corbyn was electable. From more than 19,000 votes, 67% said the answer was no.

There appear to be more optimistic signs at the Liberal Democrats, who have already reported a rise in membership in the wake of today’s announcement. As the only totally Remain-supporting party in England, analysts say they stand to pick up many of the seats they lost in 2015.

Richard Sheehan (pictured), chief executive of Shropshire Chamber of Commerce, says: “Short-term, this is clearly not what businesses need – it brings about yet more uncertainty, just at the time when we were looking for things to be slowly starting to settle down after the Brexit referendum result, and triggering of Article 50.

“But looking further forward, it does at least mean that whoever is given a mandate on June 8 will have five years to get the job of overseeing our departure from the European Union done, giving us a degree of continuity during what is bound to be a time of complicated and difficult negotiations.”

The announcement seems to have gone down well with the currency markets.

The pound had fallen dramatically to around US$1.2515 on speculation of the Prime Minister's announcement earlier this morning.

But after Mrs May announced she would seek the poll, it climbed nearly a cent higher to sit just above $1.26.

The pound is still well below the level it was before the UK voted last June to leave the European Union, however.

Against the euro, the pound was hovering around €1.180, rising from a 0.4% loss.

Alexandra Russell-Oliver, Caxton FX's currency market analyst, said: "This reversed the uncertainty seen as markets speculated on the topic of the announcement.

"If the elections grant the Conservative Party greater support, this could put the UK in a stronger position to negotiate Brexit, which could strengthen the pound."

BBC political commentator Nick Robinson says: "Not since Ted Heath called an election asking 'Who runs Britain?' has a PM called an election calling for this sort of national mandate."

There are also fears that the run-up to the general election could leave the West Midlands mayor election caught in the crossfire - will it be able to find a high enough public profile amid what were already fears of a very low turnout?

The general election announcement vcame as the Financial Conduct Authority named five principles that it says will "guide" its advice to the Government as the UK prepares to leave the European Union.

As well as cross-border market access and the ability to recruit and maintain a skilled workforce, the FCA listed cooperation between regulatory authorities, consistent global standards and the ability of the UK to influence the standards that apply to the UK.

FCA chief executive Andrew Bailey said the UK's decision last June to leave the EU had created "uncertainty for both the UK's financial industry and the FCA".

Carolyn Fairbairn, CBI Director-General, said: “Businesses will be looking to each political party set out their plans to support economic stability and prosperity over the next Parliament in a way that is fair and sustainable for communities across the UK.

“Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum.

“Firms will want to hear commitments from all parties to work in close partnership with business and back a new Industrial Strategy to make the UK economy the most competitive in the world by 2030. 

“It is essential to get the UK’s foundations right, from building a skills base for the next generation, to investing in infrastructure, energy and delivering a pro-enterprise tax environment.

“As EU negotiations now get underway, firms are clear about the serious risks of failing to secure a deal and falling into World Trade Organisation rules. It is vital that negotiators secure some early wins and all parties should commit to working to ensure businesses can continue to trade easily with our EU neighbours, while seeking new opportunities around the world.

“Whoever forms the next Government, they should seek to build a partnership between business and government that is the best in the world, based on trust and shared interest.”

bbc business editor Simon Jack added: "One thing an election in June does give Theresa May - if she wins - is more breathing room. She will be under less pressure to deliver a "clean" Brexit in 2019 without the deadline of another election in 2020 bearing down on her.

"Facing the country again while possibly still enmeshed in tortuous negotiation (with potentially little control over immigration by then) was an unappealing political prospect."