2017 Election: Credit industry reaction

Following the announcement of Thursday’s UK General Election the credit industry has been responding to the result.

 Paul Marston, Managing Director of RateSetter Commercial Finance, said “Without doubt, a hung Parliament is the worst outcome for the business community. While politicians vie for position over the next few days, a shadow of uncertainty forms, meaning that small business owners are more likely to put their growth plans on ice until the political and economic outlook stabilises.

“However, UK small businesses have experienced coalition government before, and excel at adapting to new circumstances. So in the longer term, I am optimistic that we will see businesses continuing to invest, grow and create wealth and jobs.”

Markus Kuger, Senior Economist, Dun & Bradstreet said “After the surprising election result, political and economic uncertainty in the UK has risen considerably. The election outcome looks set to further complicate the process of negotiating the UK’s departure from the EU, as the government only has a narrow majority in parliament – and even this looks vulnerable in the context of Conservative MPs’ widely differing views on post-Brexit UK-EU relations. Given the backdrop of an already slowing economy (the UK posted the lowest real GDP growth of all 28 EU economies in Q1 2017), it is not surprising that businesses are beginning to express a lack of confidence. We believe it’s highly unlikely that the first round of Brexit talks between the British government and the EU (scheduled for 19/20 June) will deliver more clarity or significant results. This means that companies will have to wait even longer to assess the impact of these negotiations on their business.

“Our analysis indicates that uncertainty will remain high in the next 18 months, regardless of what happens in the wake of the election, and we are maintaining our risk rating of DB2d and our ‘deteriorating’ risk outlook for the UK economy. We predict that, in the long run, the election result could make a ‘hard’ Brexit – which we believe would be harmful for the British economy – impossible. The best advice for businesses is to monitor the progress of negotiations, and use the latest data and analytics to assess risk and identify potential opportunities. Once a government is firmly in place and negotiations progress, organisations may have a clearer picture of the business partnerships between the UK and the rest of the world. Until then, a careful and measured approach to managing relationships with suppliers, customers, prospects and partners will be key to navigating through these uncertain times.

As Theresa May puts together her new ministerial team, the Federation of Small Businesses (FSB) is calling for a guarantee that there will be no new attempt at a tax grab on the UK’s millions of self-employed. A previous plan to raise their National Insurance Contributions caused real dismay and concern among this large group of voters.

FSB National Chairman Mike Cherry, said: “Now that it looks as though a new minority government is emerging, it is important for it to bring certainty and stability to UK business and the economy. Brexit is clearly the most urgent focus for the new government, with talks due to begin in a matter of days. But Brexit will only be successful if the government fully backs small businesses, the backbone of the economy, whose ambitions will need to be harnessed to make use of any new trade deals.”

“UK negotiators must have their interests in mind, including easy access to the single market and the ability to hire workers with the skills they need. Brexit is not the only issue affecting businesses though and the Government can’t ignore the domestic agenda.”

“Many self-employed strivers were frightened during this election by the threat of a tax grab on them in the form of higher National Insurance Contributions. I call on the new minority government to rule that out once and for all in the upcoming Budget, to reassure entrepreneurs seeking to help our economy grow that they will not have extra obstacles thrown in their way. There is no majority in the new House of Commons for a tax grab on the self-employed, and this idea should be ditched immediately.

“Across the new House of Commons there is a consensus that the Business Rates system is unfair, outdated and in urgent need of reform. There is also cross-party agreement on the need to tackle the poor treatment of many small firms by their big business customers.  We look forward to working constructively with the new Government on all of these issues.”

John Phillips, Group Operations Director at Just Mortgages and Spicerhaart said “On reflection, I think the housing market has proved to be pretty resilient, all things considered. This is particularly true in terms of the last year and a half, with the Scottish referendum, the snap general election and Brexit. Although the mortgage market has reported a slight slowdown in the last couple of weeks in the run up to the election, this was to be expected, and now that the great British public has spoken, we must once again keep calm and carry on.

“Some buyers and sellers have recently adopted the wait and see approach and it is likely that the market will quieten down again next week while things start to settle down. However, as things start to unravel, I am hopeful that the market will soon get back to the norm. We must also remember that housing demand is still outstripping supply, people still want to own their own homes and lenders are still cutting interest rates. Ultimately it is these strong fundamentals that will continue to underpin the market.”