Julia Irvine 18 Apr 2017 04:25pm

Business reacts to May's pledge to hold snap election

Resigned acceptance best sums up how the business community has greeted prime minister Theresa May’s announcement today of the snap general election on 8 June
Caption: Business organisations are concerned that the government will focus on electioneering at the expense of the economy.

“Businesses,” commented Stephen Martin, director general of the Institute of Directors, “are having to get used to being buffeted by the changing winds of politics at the moment, and will just have to endure yet another campaign.”

Business organisations are all concerned that the government will focus on electioneering at the expense of the economy and British business, even though there are wider issues beyond Brexit that need to be addressed – such as business automation, pro-business taxation, the skills gap, investment in infrastructure and energy, and trade.

Yet it is Brexit that is likely to dominate in the run-up to the election since it is the reason the election has been called.

In her statement today, the prime minister said that despite saying previously that she would not go to the polls until the end of the current term in 2020, she had reluctantly come to the conclusion that she needed to call an election to bring an end to opposition to the government’s stance on the Brexit negotiations.

“Our opponents believe because the government's majority is so small, that our resolve will weaken and that they can force us to change course,” she explained. “They are wrong.

“They underestimate our determination to get the job done and I am not prepared to let them endanger the security of millions of working people across the country.

“Because what they are doing jeopardises the work we must do to prepare for Brexit at home and it weakens the government’s negotiating position in Europe.

“"If we do not hold a general election now their political game-playing will continue, and the negotiations with the EU will reach their most difficult stage in the run-up to the next scheduled election.”

She added that the divisions in Westminster would risk the UK’s ability to make a success of Brexit and cause “damaging uncertainty and instability” to the country.

“So we need a general election and we need one now, because we have at this moment a one-off chance to get this done while the EU agrees its negotiating position and before the detailed talks begin.”

ICAEW director of business Stephen Ibbotson warned that the scale of the challenge for the new government, whatever its complexion post 8 June, would be significant.

He pointed out that national debt is currently standing at £130,000 per household with the interest bill forecast to be £46bn per annum by April 2018.

If the government was going to rely on business to help it improve the country’s finances, then it would need to implement “a robust plan underpinned by strong financial management … to deal with the nation’s finances and to spearhead the UK’s economic reboot".

Adam Marshall, director general of the British Chambers of Commerce, agreed. “Firms will want to be reassured that the key challenges facing the economy will be front and centre throughout any election period,” he said.

CBI director general Carolyn Fairbairn said that business would be looking for commitments from all parties to work in close partnership with business and to support a new industrial strategy to make the UK economy the most competitive in the world.

But she also warned that businesses would not be happy if they were denied access to the EU markets as a result of the negotiations.

“As EU negotiations get underway, firms are clear about the serious risks of failing to secure a deal and falling into World Trade Organisation rules.

“It is vital that negotiators secure some early wins and all parties should commit to working to ensure businesses can continue to trade easily with our EU neighbours, while seeking new opportunities around the world.”

The IoD’s Martin added that no one could afford to ignore these wider issues in the run-up to 8 June. “The business voice must be heard in this crucial discussion,” he stressed.

Parliament will vote tomorrow (19 April) on whether or not the general election should go ahead. This is seen as a foregone conclusion, given that the Labour party has already agreed to support the move.

The UK is not the only leading EU economy to go to the polls this year. France is about to vote in the first stage of its two-part election (23 April and 7 May), while Germany’s Angela Merkel will face the electorate on 24 September. All three are likely to have a profound impact on the approach the EU adopts towards the Brexit negotiations.