This article was first published on CityAM.
It had not yet been a year since the EU referendum when Teresa May stepped outside Number 10 to make the surprise announcement that we were to go to the polls – again.
The Prime Minister said Britain needed “certainty, stability and strong leadership” as she called out the need to resolve division in Westminster on 8 June 2017. The starting pistol was fired leading to a result that few predicted.
Fast forward and it’s now been 100 days since the General Election. The dust has settled and a new political season begins this week setting the tone for the months to come. As we look ahead to the party conferences, it’s worth pausing and asking what affect has another summer of uncertainty had on the UK economy and its ambitious mid-sized businesses?
The headlines paint an unsettling picture. BDO research published today reveals 60% of the UK’s mid-sized businesses – typically mid-market, AIM-listed or private equity owned – are feeling less confident following the unpredicted election result. The research, which asked 400 businesses to share their views on the impact of the election result on their growth ambitions, also found that only 4% are feeling more confident.
Why are the views of these mid-sized businesses – which BDO calls the UK economic engine – so important?
These businesses account for one third of all private sector revenue (£1.2tn) and 45% of private sector employment. They created more jobs in the last year than small and large businesses combined.
The economy is reliant on these businesses and it’s clear the UK’s relationship with the EU plays a crucial part in their success. BDO’s research found that 83% of businesses said no clearer picture is emerging of the future of the UK/EU trading relationship despite a raft of positioning papers from the Government this summer. A further 58% named clarity on Brexit as the number one factor they’d like to see the new Government and policymakers focus on.
But Brexit wasn’t the only thing on the minds of these ambitious businesses. While the post-election labour market is performing strongly (according to the Office for National Statistics unemployment is at its lowest since 1975), these businesses need access to greater skills and global talent. They worry about the lack of productivity and want the Government to create an environment of investment in technology, in regions outside of London and in people to address this. In fact, our research found over a quarter (26%) of businesses wants to see the new Government and policymakers focus on skills and productivity.
So what should be done?
We’ve been giving some thought to what a post-Brexit ‘new economy’ should look like – an economy which is sustainable, regionally balanced and, to coin a well-worn political phrase, works for everyone.
Our New Economy report recommends a number of key policies to help make this a reality.
Firstly, we would like to see a greater focus on smaller ‘shovel-ready’ infrastructure projects in the regions.
Secondly, we would like to see policymakers reinstate the two-year post work visa as a starter to help address the skills shortage in the technology and manufacturing sectors.
And finally, as I have said on these pages before, we need a radically simplified tax system to help give businesses certainty and stability during uncertain times.
As party conference season gets underway, it’s vital that policymakers of all persuasions listen to the voice of the UK economic engine. And as the Conservatives gather next month to talk ‘making a success of Brexit’, the UK’s mid-sized businesses will be watching closely for true direction to emerge to help cement their growth plans for the future. The Prime Minister is under real pressure now to finally deliver certainty, stability and strong leadership to take the UK successfully into this new political and economic era.
Jo Gilbey is Tax Partner at BDO.