12 | capitaregistrars.com
W
hat can business expect from the next government? Until recently, this question was shorthand for “What can business expect from the Conservatives?” And, although the answer
wasn’t entirely crystal clear, most businesspeople knew that at least they only had one set of future economic policies to wonder about. But the question has become far more interesting over the last few weeks as it now appears that the general election is anything but a foregone conclusion.
The most immediate business effect of this uncertainty has been the plunge of sterling – because if there’s one thing the City in general (and currency traders in particular) hates more than bad news, it’s uncertainty. Analysts expect the pound to remain in the doldrums until the election result is known. In fact, sterling’s fortunes appear tied to those of the Tories, meaning that faltering Tory voting intentions are good news for exporting manufacturers – so, in this sense at least, the election’s outcome is already having an effect on business.
Business wish list Business has made it pretty clear what it wants the next government to do. John Cridland, the CBI’s Deputy Director-General, says: “Any new government will have a lot to do in its early days, but the economy must be central to its plans, especially given the state of the public finances and the global downturn.” Mr Cridland adds that the business community would like a return to balanced budgets by 2015, efforts directed towards sustainable growth and that whoever wins needs to act quickly. He also wants action on youth unemployment, energy security and various other nice-to-haves. In all, the CBI provided a 12-point wish list. But what can it expect the main parties to deliver?
SPRING 2010
In such an uncertain climate, any firm promises you make now may be used to bash you
over the head with in 12 months’ time
Three different shades of politics, but will we see such clear differences in economic policy?
Until recently, it seemed that there might be some clear water between the parties. The Tories were going to cut spending more and do so more quickly – and then they weren’t. Cuts went from deep to “modest”. The party is still running on a cut taxes / cut bureaucracy / cut the deficit platform. David Cameron says that within 50 days of being elected, the Tories will introduce an emergency budget with cuts on corporation tax and incentives for start-ups. “We’ve got to roll up our sleeves and deal with our deficit and deal with our debts” is a typical statement of intent.
Cautious promises But, as any number of pundits have pointed out any number of times, there’s a lot about the Conservative plans that are vague. In some ways this is quite understandable – in such an uncertain climate, any firm promises you make now may be used to bash you over the head with in 12 months’ time. Besides, for all the Conservatives’ earlier talk of efficiency savings, few believe that such savings will be enough to fund all the tax cuts they want and significantly dent the deficit.
So, what about Labour? Well, along with regularly attacking Shadow Chancellor George Osbourne for being callow and saying that none of the Tory proposals add up, Labour has said that it will allow businesses to spread out their tax payments and that it will offer more cash to encourage employers to recruit those without jobs. And, on the macroeconomic front, Labour have said that they will address the deficit, but not this year – as they do not want to flatten the nascent economic recovery.
In short, both parties have slightly different details but – for all their tough talk – both are likely to offer a few token cuts this year and then more aggressive spending cuts next year. It is also notable that many of the supposed big differences, such as the Conservative desire to abolish the
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