Big issues including Brexit and the NHS have made the headlines during the General Election campaign; for SMEs these issues may seem supplementary to policies which impact businesses directly. However, these and other concerns of the electorate may have an impact on the trajectory of economic growth, which gives business owners much to think about when it comes to posting their decision into the ballot box.
What are the parties promising businesses?
SMEs are given consideration in the Conservative Party Manifesto; alongside an acknowledgement of their importance to the economy there are promises to cut taxes for small retailers, reviewing business rates and increasing the Employment Allowance, which all support improved cash flow. Labour also acknowledge SME requirements, including an expansion of the apprenticeships by expanding the number of businesses exempt from the levy to 50% to address the skills gap. Labour also propose the creation of a Business Development Agency for free advice and support. The Liberal Democrats focus on the benefits to business of cancelling Brexit and also promise an expansion of the British Business Bank to provide SMEs with better access to VC funding. The Green Party also promise better access to funding and an increase to the Employment Allowance as well as measures to support green businesses. This snapshot of some of the policies suggest that all parties are looking to win over business owners, but whoever takes residence at Number Ten after the General Election, it’s not the only issue to consider.
Investment in infrastructure
While government investment can mean higher taxes, businesses will be considering the benefits of improved infrastructure. From high speed broadband to improved public transport, an improved infrastructure could support business communications and access to talent for business growth. Promises on the NHS also have ramifications for businesses – not only in terms of the levels of taxation but also the health of the workforce. There’s no doubt that an improved infrastructure could be a positive in the modern business environment, but there’s clearly a balance between costs and benefits for small businesses when it comes to how it is paid for and who pays the bill.
What about Brexit?
Approaches to Brexit in the manifestos are mixed; the Conservatives promise full steam ahead with their current plan, the Liberal Democrats promise to revoke Article 50, Labour and the Green Party want to start again with a new agreement and a second referendum on the final decision. All but the Conservative approach mean further delays and uncertainty which could impact business confidence and budgetary planning.
Fluctuations in sterling and the impact on business
The uncertainty of the General Election is just the latest factor casting a cloud over the pound in the foreign exchange market. Volatility in the value of sterling has been an added pressure to businesses, which have been weathering the weakness of the pound since the EU referendum vote in 2016. While the result is unknown, the pound is vulnerable as the market responds to the latest round of polls and speculation. Once the result is clear, it may put an end to some of the market volatility, leaving businesses to adapt to whatever new policies the newly-elected government will bring. However, depending on who takes the top spot and what that means for Brexit and the economy, there may be more uncertainty and fluctuations in the value of the pound ahead in 2020 so SMEs will need to continue to be vigilant on the matter of currency risk.