Election uncertainty puts business activity on hold

There is no doubt that there is a lull in business activity ahead of the UK election which I believe is due to uncertainty about the outcome.

But the outcome itself is unlikely to deliver the certainty needed for businesses to make plans for the future. Rather than certainty, the psephologists are predicting we are a long way from having a majority government and we may be entering uncharted political territory.

At the moment, there is little prospect of even a coalition forming a government with a clear majority. This is somewhat alarming for business as the party leaders have ruled out possible alliances. The likelihood is that no party will be able to survive a full five-year term.

Britain is still a novice when it comes to coalitions. This is a shame as experience in those countries that have had them for some time has shown that they can be a good thing. One big advantage of coalitions is that they provide scope for parties to reverse some of their election promises, which all too often are made to solicit votes, despite whether or not they can be afforded.

From the business perspective, in a country where government by coalition is accepted and understood, a strong coalition can be a desirable outcome as business needs both stability and extreme policies being tempered by coalition partners.

It will take a while before Britain reaches that point, so the uncertainty is likely to continue and in that environment many business will continue to struggle as there is little to justify attempts to grow in an uncertain environment.

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