What Does a Hung Parliament Mean for UK Businesses?

UK Parliament

While the impact of a hung parliament is often variable and unquantifiable, it is generally considered to be a bad thing for businesses and the electorate as a whole. After all, the lack of a parliamentary majority makes it exceptionally difficult for a coalition government to drive its mandate, meaning that there is often huge amounts of uncertainty surrounding interest rates, inflation and the value of the pound.

How Will the Recent Election Result Impact on Businesses?

Make no mistake; however, the typical consequences of a hung parliament are sure to be amplified in the current climate. After all, Brexit negotiations were due to start in 11 days’ time, while the Conservatives’ decision to form a government with Ulster’s Democratic Union (DU) party could delay this time-line further.

So, what should businesses expect in the months ahead? Firstly, the already-devalued pound is likely to trade in an even narrower range against the U.S. Dollar and the Euro, especially as the Tories adapt their manifesto and make concessions for their new, parliamentary partners. This will continue to drive up the cost of imports into the UK, potentially impacting on product-orientated firms that manufacture their own goods. Conversely, export costs will fall considerably, creating a competitive if slightly under-priced market in some sectors.

There is also likely to be continued uncertainty about the new parliament’s economic approach, as the DU will almost certainly make key demands that will change the Tory approach. This means that inflation is likely to continue to rise in the coming weeks, as the cost of living soars disproportionately to real wage growth and savings rates. With an actionable plan of action to counter this, consumer spending will quickly decline and place a huge strain on the nation’s businesses.

The Last Word: How Can Businesses Survive Such a Climate?

As you can see, this makes for a decidedly bleak and uncertain economic climate. This does not mean that businesses cannot take steps to counter this, however, particularly in an age where brands and corporate entities are used to volatility, violent market shifts and a constantly changing macroeconomic climate.

With this in mind, businesses with a proactive mind-set can take practical steps towards consolidating their growth and evolving even as their marketplace depreciates. A forward-thinking entrepreneur may choose to seek out corporate broking and wealth management services, for example, as it looks to source funding and optimise its assets for the future. With this type of service, you can benefit from bespoke guidance that enables your business to thrive against the backdrop of a strained economy.

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