Whilst votes are still being counted and the full outcome remains unknown what is clear is that there UK have voted for the Conservative party in numbers not predicted.
We have spoken to Guy Rigby to get an SME view so far and Alan Wilde from Barings Asset management for his take from a financial markets perspective.
Guy Rigby, partner and head of entrepreneurial services at, accountancy and investment management group, Smith & Williamson said: “More than anyone, business needs certainty of Government, as well as business-friendly policies to keep our economic recovery on track. We would look to the incoming Government to maintain its existing momentum and act quickly on manifesto pledges to roll out the ‘Help to Grow’ scheme for start-ups, raise the target for SMEs’ share of central government procurement to one-third and free our smaller employers from NICs.
In addition to more general commitments to cut red tape, review business rates and strengthen prompt payment rules, we would also like the new Government to reintroduce the Corporate Venturing Scheme, which would encourage established businesses to invest in smaller businesses, a relief that was withdrawn in 2010.”
Alan Wilde, Head of Fixed Income at Baring Asset Management added to the sentiment that Guy Rigby was making by saying: “The upside potential from here for sterling is, in our view, limited but importantly the risk of a lurch lower in the pound is also less likely as financial markets are reassured by continuity and the prospect of further fiscal consolidation. This should ensure interest rates remain lower for longer. The job is clearly not done (in reducing the debt/GDP burden) but this morning that will largely be forgotten in the euphoria of a relief rally. Further down the road the new Government will be anxious about the lack of productivity growth in the UK and dependency on the consumer for growth and a lower exchange rate, particularly against the €uro, may be a means to rebalance the economy and underwrite growth.”
However Wilde did sound a note of caution by saying: “Longer term, the next worry for investors will be an In-Out Referendum on continued membership of the European Union which PM Cameron has vowed to hold in 2017. It will be interesting to see if the poor showing of UKIP changes the PM’s determination to hold this ballot. If it goes ahead, the business community will bring strong support to both sides during what could be a long and damaging debate but quoted companies would almost certainly want to avoid a divisive Referendum with all the attached risks it would bring to investment and expenditure plans until resolved.”
