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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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Pre-election honeymoon period for businesses?

With an election looming it is unlikely that there will be any controversial legislation between now and May that will upset SME voters.
There may, on the other hand, be promises made in party manifestos, though we’re not commenting on whether they will be kept!
The pre-election honeymoon period is, however, a good time for businesses to get their finances and their operations in order.
Personal tax returns should have already been submitted (by 31 January) and firms ought to be ahead of the curve with their RTI (Real Time Information) systems in place (the deadline for SMEs is 6 March). It is also time for SMEs to make sure they have a planning time frame for pensions auto-enrolment as the various deadlines are looming (depending on the number of employees and whether an application for deferral has been agreed).
So this period provides a small breathing space for businesses to do some housekeeping and make sure their affairs are in order before the next onslaught of initiatives from a new government, which may be one that philosophically doesn’t like businesses.
A close look at the monthly management accounts may identify adjustments that can be made to operations that improve efficiency, cut costs or reduce risk. It may also identify scope for reducing debt or building up a war chest for investment. It may identify finance facilities that are due for renewal in the near future that might better be renewed early.
It could also be a good time to assess how well the marketing has been performing and tweak it if necessary.
How will you use this time to create a sharper, more efficient and more competitive business for the next financial year and be ready for whatever the election brings?