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Election result leaves the channel facing more uncertainty

A hung parliament and the prospect of more uncertainty is the last thing most in the channel would have wanted

Whatever political persuasion waking up to a hung parliament is the last thing many in the channel would have wanted. The word that is now being used to describe the situation is 'uncertianty' and that is never good for business.

Since it became clear that the Prime Minister Theresa May would not be able to gain a majority Sterling has fluctuated and the prospects for speedy Brexit negotiations are also looking very unclear.

Some of the initial reactions from those speaking for the business world was dismay with the prospect of further uncertianty.

Speaking on the BBC Today programme this morning Carolyn Fairbairn, head of the Confederation of British Industry (CBI), said that businesses would not welcome the election result.

"Businesses across the country will be pretty stunned this morning by this result. Their main concern in the shortrun will be the uncertianty and they will be looking to the government to create a a properly functioning administration with a strong eye on financial stability and putting the economy right back up the agenda," she said.

"The world will be watching and we need to signal strongly that we are pro-enterprise and open for business," she added.

Even at this stage it is possible to start to focus on some of the areas that could cause uncertainty and have a potential impact on the channel.

Price rises

One of the consequences of the Brexit referendum and the uncertianty around the timing of the negotiations, if it would be a 'hard' or 'soft' exit and the prospects for free movement were accelerated changes in exchange rates. That led to the introduction of price rises from US vendors, which became an issue for distributors and resellers having to manage inventories and tell customers about the changing prices.

At the time of writing Sterling had returned to levels last seen in April. There will be many vendors keeping an eye on its progress because the threat of further increases in prices cannot be ruled out.

 

Brexit

Pointed at as one of the factors holding back some investment by customers, particularly those multinationals operating across Europe, the fear following the election result is that the process could be delayed further.

Indications coming out of the EU are that the clock is ticking regardless of last night's ballots and the Article 50 process will hit the deadline by March 2019.

Brexit has played a significant role in the election and it is unclear how the result will impact the negotiation stance taken by the government.

 

Election promises

The channel will have cast their eyes over the various pledges concerning corporation tax, employment regulations and tech investments made in the manifestoes.

Given the lack of a majority for any party it will be difficult to predict exactly what could change going forward. Those plans that are unlikely to gain cross party support are going to find it a struggle to become law.

With the Prime Minister due to go to the Queen and get the green light to form a government the chances are that more details of what comes next should emerge over the next couple of days. The channel will be looking for a period of stability with a government making efforts to reduce uncertianty.

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