After a turbulent few years in politics, featuring two important referendums and the triggering of Article 50 – the formal process of leaving the EU, many thought politics would have a quieter end to the remainder of 2017 but that doesn’t seem to be the case. On 18th April, Prime Minister Theresa May announced that she would be calling a snap general election on June 8th.
In a statement, which was given within an hour of the announcement of the prime minister’s speech, Mrs May said that the time was right for a general election as; “The country is coming together but Westminster is not.”
The decision has come as a surprise to many after months of the prime minister ruling out the possibility of a snap general election before the end of the parliamentary term in 2020. However, she said she had reluctantly changed her mind because of Brexit and the way it is being handled in parliament.
She blamed Labour, the Lib Dems and members of the House of Lords for trying to halt and lengthen the Brexit process which is undermining her’s and her government’s negotiating position. While all party leaders have welcomed the prospect of a snap election to change the course of Brexit, many see Theresa May’s decision as a canny move to secure a Conservative majority and give her the mandate to negotiate the Brexit she wants.
However, away from the politics, many people are worried about not only how this election will affect Brexit and the path our exit from the EU will take but they are worried about the effect it will have on business. Many small businesses are already struggling to deal with the economic uncertainty and weak pound as a result of the Brexit vote.
Recent research based on the quarterly Red Flag Alert shows that small businesses in Yorkshire are experiencing increased financial distress. quarterly Red Flag Alert shows that small businesses in Yorkshire are experiencing increased financial distress. By the end of Q1 in 2017, 18,428 business in Yorkshire were showing signs of financial distress, a rise of 1189 businesses with SMEs making up 96% of the total figure.
The rise in financial distress for businesses in Yorkshire is being mirrored around the UK, again with small businesses the most affected. This is a worry for many especially now a snap general election has been announced as they are concerned this could affect businesses even further.
So far the response from the city has been calm with the pound rising slightly as a result of the announcement. Many commentators and city analysts have hinted that this may be due to the strong likelihood of Theresa May winning a significant majority which would signal a softer Brexit and a smaller shock for the economy.Theresa May winning a significant majority which would signal a softer Brexit and a smaller shock for the economy.
Business groups have a more mixed reaction to the call for a general election. There are those who feel it will give Mrs May a stronger mandate for Brexit while some feel it could distract from other issues and provide further instability for the markets.Mrs May a stronger mandate for Brexit while some feel it could distract from other issues and provide further instability for the markets.
The rising inflation rate and low productivity from Britain’s workforce is a concern for many who feel that this needs to be tackled through government intervention and a stable economy.
So far, it seems that if Theresa May wins the election and secures a significant majority, the markets, which like stability and predictability, should turn in the UK’s favour helping businesses during this difficult time. However, if another party wins or Mrs May only secures a slight majority, we have no idea how this will impact the pound, the markets and businesses up and down the country.
For some, a snap election is a risk that should not have been taken but it is also being viewed as an opportunity to secure Britain’s future for the next 5 years. One thing is for certain, business owners and economists will have their eyes firmly fixed on the polls to try and plan ahead for the potential outcome of this Brexit-based general election.