For UK business, the 2017 general election (part 1?) result which produced a hung parliament is the worst possible outcome.  It is difficult to find much optimism.  My recollection from previous hung parliaments is that politicians know that there is going to be another election so every issue becomes a major one as they score political points off each other. 

The trade unions that back Labour are likely to become political as well. During the last two hung parliaments strikes were a common feature. In the first parliament it led to a Labour government. The electorate was weary of the transport chaos and going without electricity and voted for “peace”.  It didn’t happen, so in 1979 it was payback, and the electorate voted in Margaret Thatcher.

In this current parliament, we are unlikely to see any major legislation.  FOBTs will be dealt with once and for all, and the Government will spend, tax and borrow.  Actually, FOBTs aside, it could be good for the gambling industry. I have always said the gambling sector does better under a Labour government, until the economy is trashed, and the Conservatives are returned to invoke some fiscal prudence.

This time round we are likely to see the Conservatives out bid Labour on spending, which is a worry on three fronts:

1. Who can we elect to restore the nation’s balance sheet when both parties are profligate spenders?
2. When the Conservatives go left, Labour goes further left.
3. The Conservatives have continued spending while in power, they have not reduced the overall deficit. So, what is now envisaged?  It doesn’t bear thinking about!

In 2010 at the height of the recession, Belgium achieved a GDP growth rate of 2.7% without an elected government for 589 days, the longest period of any developed nation.  What did the politicians do during Belgium’s hour of need?  They argued about everything from Flemish collaboration in World War Two to allegations of francophone cultural imperialism seeking to impose the Gallic language in Flanders, according to an article in The Telegraph in 2011.

If the Government doesn’t do much, then that will be a good thing.  It has meddled too much, none of which is to the advantage of business.  

by Warwick Bartlett