The recent 2024 election has brought talk of significant changes in the UK’s economic outlook. Understanding these changes can help with business planning and strategy, from small and medium-sized enterprises (SMEs) to large corporations.
In this blog, we analyse the potential impacts of the election results and provide insights to help businesses prepare for the future.
Policy changes and their impact on businesses
One of the immediate areas of focus post-election is the anticipated policy changes. The newly elected Government has already indicated several economic reforms to boost growth and support businesses. Tax reforms are a key area that could directly impact companies across the board.
The Government has proposed a reduction in corporation tax rates from 25% to 20%, aimed at incentivising investment and promoting economic growth. This change is expected to benefit larger corporations significantly, potentially freeing up funds for expansion and development. The reduction could provide much-needed relief for SMEs, allowing for reinvestment in their operations and workforce.
Additionally, the introduction of new grants and funding schemes to support innovation and digital transformation is a promising development. SMEs, in particular, stand to gain from these initiatives, as they often face challenges in accessing capital for such investments. Smaller businesses can enhance their competitiveness and resilience by taking advantage of these schemes.
Labour market and employment considerations
The election results have also brought about discussions on employment policies. The new Government has pledged to address skills shortages through increased vocational training and apprenticeship funding. This focus on upskilling the workforce is a positive move for businesses, as it can help bridge the gap between the demand and supply of skilled labour.
However, changes to employment law, including adjustments to minimum wage rates and employment contracts, may have mixed effects. While higher minimum wages can increase consumer spending power, they also mean higher payroll costs for businesses.
Companies will need to carefully assess their workforce strategies and consider how to balance these costs with the benefits of a more skilled and potentially more productive workforce.
Economic outlook and market confidence
Market confidence is another critical factor which the election outcome has influenced. Initial reactions from the financial markets have been cautiously optimistic, with the FTSE 100 showing a moderate increase following the election. This positive sentiment is likely driven by the Government’s pro-business stance and its commitment to economic stability.
Businesses should monitor market trends and economic indicators closely. Factors such as inflation rates, interest rates, and consumer confidence will significantly shape the economic environment. Current forecasts suggest a moderate growth rate of 2.5% for the UK economy over the next year, which, while not spectacular, indicates a stable and predictable business environment.
Regulatory changes and compliance
Businesses also need to stay informed about regulatory changes. The new Government has signalled intentions to simplify regulatory processes, particularly for SMEs. This could mean reduced administrative burdens and lower compliance costs, making it easier for smaller businesses to operate and grow.
However, it is vital for companies to stay updated on specific regulatory changes that may affect their industry. For example, environmental regulations are expected to tighten, with increased emphasis on sustainability and carbon reduction targets. Businesses in sectors with high environmental impacts will need to invest in greener practices and technologies to comply with these new standards.
Strategic planning for the future
Businesses should prioritise strategic planning in light of the election results and the potential changes ahead. The first step is to clearly understand the new policies and their implications. Engaging with industry associations and professional advisors can provide valuable insights and help navigate these changes.
It is also advisable to review and adjust business plans to align with the new economic landscape. This may involve re-evaluating investment plans, exploring new markets, or diversifying product lines. Flexibility and adaptability will be key in responding to opportunities and challenges arising from the new Government’s policies.
The election results have set the stage for a series of economic changes that will impact businesses of all sizes. By staying informed, assessing the implications of policy changes, and proactively planning for the future, businesses can position themselves for success in this evolving landscape.
We can help
At Thompson Wright, we are committed to supporting our clients through these changes. Our team of experts is here to provide guidance and advice tailored to your specific needs.
Contact us today to discuss how we can help your business thrive in the post-election economic landscape.