FD Insight: FD's react to recent election results
The Conservative party won a majority vote in the 2015 general election, increasing their vote share after five years of coalition rule.
To gauge the mood in business and finance, we debated the topic with our FD and CFO colleagues. And while they agree on many things, on others they remain divided.
At the close of 2014, our members told us they hoped for a Conservative win in the election.
As part of FD Recruit’s annual end-of-year survey, which asked FDs to review the previous 12 months and talk about their hopes for the year ahead, the Tory vote came out on top with 63%.
“The Conservative party has positioned itself as the business-friendly party,” said one FD at the time. “Their approach to economic recovery is pro-enterprise, with a commitment to cutting taxes and boosting jobs. They have the business vote.”
Though another pointed out that: “The Conservative party will hold corporation tax at 20 per cent, where the Labour party proposed an increase to 21 per cent. However, they would have used that increase to freeze business rates for smaller firms, so your viewpoint will depend upon where you sit on the scale.”
The Conservatives’ overall majority put an end to five years of coalition government. Most pundits predicted a much more uncertain result - likely another coalition, perhaps one that took days or weeks to agree - so business confidence was boosted when an outright winner was elected.
Said one CFO: “The coalition government made some positive moves for business but there is no doubt that shared power was a little unpredictable and that the uncertainty ahead of the election caused instability in the markets. As soon as the result was announced, the sterling and the markets both strengthened.”
Another FD added: “It will be interesting to see how the Conservative party governs without the Liberal Democrat influence. Vince Cable was a strong supporter of export but there are also Tory policies that he blocked, such as those relating to the Beecroft Report.”
Many FDs expect the rules regarding hiring and firing, which were addressed in the report, to come under scrutiny once again. This could mean a rewriting of employment laws, including the introduction of “no-fault dismissals”, making it easier for companies to fire employees without facing employment tribunals.
“That will bring us more in line with the US system and make us more competitive,” explained an FD.
Soon after the election result was finalised, Sajid Javid was put in charge of the Department for Business, Innovation and Skills.
“Sajid Javid is a sound choice,” said one FD, echoing the sentiments of many others. “He made some shrewd moves working in the Treasury and he will be able to draw on his finance background.”
“Javid’s appointment will please those who voted Conservative for their business agenda,” said another. “His principles state that government should be hands-off so we can expect lots of cuts to the burdensome red tape. That’s great news for enterprise, and something most businesses had at the top of their wishlist.”
However, there was concern from some quarters. One FD noted: “One might welcome Javid’s cull on legislation, but remember that he came from and is involved with the banking sector. Considering the current state of the world economy, many believe that this particular industry could do with a little closer scrutiny, not looser reins.”
The topic that divides FDs most, which reflects the country’s mood as a whole, is that of Europe and the so-called & lsquo;Brexit’.
In our FD Recruit straw poll, FDs marginally favoured maintaining EU membership rather than severing ties.
One CFO, whose company is a heavy exporter, said: “The EU is good for our business, it makes us part of a large community. Giving up Britain’s membership will just put up barriers to trade. It will make us less competitive than our rivals from both Europe and further afield, and so we would face losing business - or the prospect moving operations overseas.”
However, another FD countered: “The EU is expensive and limits us. There are some scary headlines about large companies withdrawing their involvement from the UK at the cost of millions of jobs, but I don’t think this is a likely reality. The EU is a strong place to do business, but the fastest-emerging economies are outside of Europe and we should perhaps be putting more emphasis on those.”
And so the FD vote, as with the public vote, is currently split on Europe, with business experts arguing from both sides. But as for electing a Conservative government, the FDs we polled were, overall, buoyed by the result.