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Fears of UK prime minister change could undermine SME confidence
There are concerns that uncertainty could hit confidence and conditions in the small business community
The channel is all too aware that changes in the political landscape can have a negative impact across its its SME customer base with uncertainty delaying investments
The decision by Keir Starmer to resign as UK prime minister has raised some concerns that the summer, during which there will be a process to produce a fresh leader, will hit small and medium-sized enterprise (SME) IT spending.
Andy Burnham, former Greater Manchester mayor, has made it clear he will look to replace Starmer, but other candidates could emerge and lead to a summer of debates and internal focus from the government.
Not only will there be a change at Number 10, but the prospects are that there will be a new chancellor coming with a cabinet reshuffle.
Kevin Fitzgerald, UK managing director at Employment Hero, said the timing of a change of leadership came at a delicate moment for the SME community.
“Changes in government are always challenging for SMEs in the UK, which is just starting to see some slow recovery after a period of significant turbulence,” he said.
Fitzgerald added that the past couple of years have not always been easy ones for small businesses, and they would be hoping for positive changes.
“What businesses in the UK will be looking for now is clarity and stability,” he said. “What we’ve seen over the past one to two years is businesses trying to navigate increasing costs and complexity whilst continuing to push for growth. Our most recent data shows that employment growth across UK SMEs rose 1.2% month-on-month in May. Whilst businesses are hiring, the cost of employment is soaring, and this is having a knock-on effect on wages, with full-time pay down 1.5% compared to three months ago.
“The uncertainty that will now follow risks stalling the progress that we are beginning to see among SMEs,” added Fitzgerald. “We’ve seen the seismic impact that policy change can have on the UK jobs market and whoever is steering the UK economy moving forward needs to provide our country’s small businesses with a solid foundation so that they can continue to hire and create the opportunities that will ultimately drive the country forward.”
Positive change
That sense of supporting positive change was echoed by those business groups representing the SME community.
Tina McKenzie, policy chair of the Federation of Small Businesses, said a fresh face at Number 10 would be an opportunity to improve life for businesses.
“The next prime minister should set out a bold and clear vision to overcome the significant obstacles making life a misery for the UK’s 5.7 million small businesses and self-employed,” she said.
“This is a golden opportunity to transform the government’s relationship with small firms, not least by revisiting the disastrous business rates decisions last year,” said McKenzie. “That must be coupled with a clear plan to lower the costs of employment, and a guarantee to see through legislation currently going through Parliament to stamp out late payments by big businesses to their smaller suppliers.”
She added that the SME community was key to driving the UK economy forward and should be firmly on the next PM’s agenda.
“Small businesses are at the heart of local economies, providing jobs, opportunities and growth in every constituency in the country,” said McKenzie. “They’ve been taken for granted for too long, and we hope this now changes.”
