26.6.2024 | Tax

The General Election: What does it mean for business?

Beatons Director Stephanie Hammond gives an overview of some of the areas to watch so that your business can be prepared.

There’s a lot of noise around the upcoming general election, and sometimes, it can be hard to pick out the facts that really matter.

A general election represents a significant event that will impact the country’s economic outlook and ultimately affect the business landscape.

We understand that this can lead to a period of uncertainty as businesses look ahead to try to understand how things might swing.

Policies and new regulations

Changes in economic policies and regulations are usually one of the most direct ways for an election to impact business. They generally refer to tax and government spending so that they can affect the financial ups and downs of your organisation.

Broadly speaking, policies that favour lower business taxes and deregulation can often boost business investment and growth. On the other side of the coin, policies that focus on increasing taxes and bringing in more stringent regulations may mean higher costs for businesses – but a boost to government spending could, in turn, be positive for the economy and help your business in a different way.

Look out for:

  • Tax: Company tax rates changes will directly impact a company’s profitability.
  • New rules: Changes to employment laws, environmental regulations, and industry-specific standards will all have a bearing on how you run your business.

Currency and Financial Markets

Financial markets and currency values can take a hit around this time. Investors react to the anticipated and actual outcomes of elections, which can lead to volatility in stock markets and fluctuations in currency exchange rates. Profit margins and pricing strategies can be affected, especially for those involved in international trade.

Look out for:

  • Stock Markets: Election outcomes perceived as business-friendly may lead to market rallies, while those seen as unfavourable could cause market declines.
  • Currency: Changes in government policies on trade, fiscal stimulus, and economic management can lead to currency appreciation or depreciation.

Market and consumer confidence

A general election can temporarily unsteady market and consumer confidence. Businesses and consumers often delay spending while they wait to see the outcome.

Look out for:

  • Investment impact: Major investments by businesses or purchase orders could be delayed until after the election. When the outcome is clear, spending may be revisited and decisions revised.
  • Retail, hospitality and service-related businesses should be conscious now, that consumers could put the brakes on spending for a while.

The employment market

The employment market is another area where general elections can have a deep impact. Policies on minimum wage, workers’ rights, and immigration can affect spending and the ability to recruit the right workers.

Look out for:

  • Wage Policies: While a further imminent increase seems unlikely, changes in the policies around minimum wage laws could increase employment costs for businesses. Businesses in low-margin industries can be particularly sensitive to these changes.
  • Immigration Policies: Adjustments in immigration laws can affect the availability of skilled and unskilled labour, with knock-ons to your recruitment strategies and employment costs.

The takeaway message here is about planning and preparation. Yes, the general election could affect your business, but by looking ahead and making adjustments, you can ensure it remains stable and continues to grow.

As we learn more about the party manifestos, if you have questions about how any proposed policy could affect your business or tax situation, please do get in touch with us at Beatons, we will be delighted to help you.

Contact: info@beatons.co.uk / 01473659777.