CBI: Political uncertainty concerning UK businesses

Thursday 22 May 2014

Limited companies and sole traders are likely to be among those companies that now consider political uncertainty a risk for investment and future growth.

Sir Mike Rake, president of the Confederation of British Industry (CBI), told business leaders and politicians at the organisation's annual dinner that there is growing concern about the UK's political position.

The three main events causing alarm bells to ring are the Scottish referendum, Britain's place in the European Union and the upcoming general election.

"Over the next 18 months, we face various challenges," Sir Mike said. "As our economic situation has stabilised and now looks more promising, the focus of business concern has shifted towards these issues. And the uncertainty they engender is climbing up businesses’ risk registers, becoming a factor in investment decisions."

In the case of the Scottish referendum, the CBI president pointed out that there is a lot at stake for the economy of the entire UK, both directly and indirectly.

"After more than three centuries of working together and respecting our individual cultural differences, we have significant common economic interests," Sir Mike explained. "We should have no fear of drawing strength from the deep stake we all have in our union."

There is an internal market of over 60 million people between England and Scotland, and the rest of the UK makes up 65 per cent of the export market of Scotland.

Creating an international border between the two nations will cause business and household costs to rise for both countries, Sir Mike claims.

Worryingly for limited companies and sole traders, these issues aren't properly addressed in the independence white paper, according to the CBI.

Meanwhile, the fate of Britain's place in the EU is also a concern and Sir Mike believes there is no question that the country should sustain its ties.

"Business is in no doubt that the UK must retain and secure its global future – trading and investing. Open markets are an essential part of our open economy," he stressed.

Sir Mike added that Britain cannot fulfill its potential as an isolated nation and it must preserve its connectedness.

Only by remaining a part of the EU can the UK access the growth and jobs it needs to recover, not to mention innovation and talent.

Of course, the issue of an EU referendum is a hot political issue in the UK and was tied to the election promise of the Conservatives.

With the general election coming up next year, this adds another layer of concern to an already uncertain situation.

A change in leadership may spell problems for a recovering economy if the policies that are currently working to support business are not continued by the next parliament.

Sir Mike told attendees that future decisions must be based around getting the UK through it's long-term economic challenges, investment and the creation of opportunities. There is no room to let politics get in the way.

He explained that if politicians work together to remove risk and create the right environment, businesses will be able to deliver the prosperity that the UK "needs and deserves".

By Victoria McDonnell

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