No matter how often we might have heard soundbites such as ‘strong and stable’ and ‘Brexit means Brexit’ which are intended to reassure us, it seems that every major political event of the past twelve months has delivered an unexpected result and an uncertain future. June’s general election was no different: Theresa May began streets ahead in the polls, and ended up scoring a political own goal in reducing the parliamentary majority she intended to increase, resulting in a hung parliament. You might expect the business world’s reaction to reflect the apparent turmoil in Westminster, but it’s relatively muted response perhaps suggests that those in business now see uncertainty as something to simply accept as part of daily life.
For example, the reduced Conservative majority and the alliance with the DUP they’re likely to establish in order to form a government, puts the future of the Tories’ plans to cut corporation tax to 17% in doubt. Whilst the DUP clearly think the same way – they want an even greater cut to 12.5% in Northern Ireland – the somewhat reinvigorated Labour party wants the tax to increase. Any tax changes, until the political climate has settled down again, will almost certainly be simple and symbolic, meaning that any action regarding business tax will most likely be put on the back burner.
VAT is another tax many might expect to be reviewed soon after a general election result but, again, the continued uncertainty of the UK’s political position means that this too is now unlikely. In the case of VAT, this stems not only from the divergent attitudes of the various parties towards the tax, but also through the continuing unpredictability surrounding Brexit. Theresa May’s negotiating position appears more severely undermined than ever, and the ‘hard Brexit’ the government previously appeared to be aiming for now seems almost entirely unlikely.
From an accounting point of view, we have seen many businesses try to ‘future proof’ themselves and manage the uncertainty by investigating the best forecasting tools available, in an attempt to secure the best chance of protection against any political or economic surprises the future might hold.
With Theresa May’s days in number 10 apparently numbered, the likelihood of a new Chancellor being put in place when her successor arrives, and the strong possibility of another election in the not-too-distant future, it seems we may all have to simply accept the lack of certainty we’re currently experiencing and factor this into our business plans as best we can.