Why businesses must be vigilant as general election looms

It is now less than a year until a UK general election is due and it is playing on the minds of many business leaders, according to new research.


The potential for instability as a result of a new party taking power topped a poll looking at the possible anxieties that could be faced in the near future.


Deloitte’s latest quarterly survey asked finance chiefs to rate risks on a scale of 0-100 with the general election topping the pile with a score of 55.


The possibility of an EU referendum also scored 50, placing politics ahead of potential interest rate increases (46) volatility in emerging markets (45) and the housing market (39).


The danger of policy changes could disrupt momentum for businesses and could potentially harm their finances if measures are introduced that do not support certain business types.


According to John Cridland, the director-general of the Confederation of British Industry, the ‘cocktail’ of political risks could even be a threat to the economic recovery.


As a result it is important for businesses to keep a watchful eye on their finances in the months ahead and to build up additional funds where possible to cope with potential changes.


A failure to do so could lead to financial issues in the long-term, with company administration or insolvency becoming a serious threat.


Early actions, especially for businesses in sectors where the effects of the recovery are slow, could make a big difference in the long-term.


The survey results showed that many bosses have concerns over Labour leader Ed Miliband’s plans for the energy market, house building and his approach to the banking system.


At the same time, conservative plans regarding airport expansion and foreign visas were also facing skepticism, as was the possibility of an EU referendum in 2017.


“Uncertainties around political and policy risk have moved centre stage,” according to Ian Stewart, Deloitte’s chief economist.


He added that growth was quickly beginning to gain momentum but stressed the importance of proceeding with care as far as the political situation is concerned.


By Phil Smith


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