Business News - 2024 election special
Here are a couple of articles which we think could be interesting to many of our readers
How a general election can affect your business
The various parties’ general election campaigns are in full swing. Of course, I do not wish to take sides or promote the views of one party over another. However, regardless of what happens, this could be a pivotal time for our country, our families, and our businesses.
We can’t be sure that any party will deliver on their promises, and ultimately, we will understand the intent of a new government after their first Budget. However, below are the issues worth looking out for during the various campaigns.
Economic Policies and Regulation
One of the most direct ways a general election affects businesses is through changes in economic policies and regulations. When we talk about economic policies, we usually refer to taxes and government spending.
Broadly speaking, policies that favour lower business taxes and deregulation can often boost business investment and growth. Conversely, policies that focus on increasing taxes and introducing more stringent regulations may mean higher costs for businesses but increase government spending that may benefit the economy and your business in a different way.
Key Considerations:
Taxation:
Changes in the company tax rates will directly affect a company’s profitability. Lower taxes generally increase net income, while higher taxes reduce it.
Regulations:
Alterations in employment laws, environmental regulations, and industry-specific standards could make it easier or more complicated to run your business.
Market and Consumer Confidence
General elections can significantly influence market and consumer confidence. The period leading up to an election often brings uncertainty, so businesses and consumers delay spending money while they wait to see what the outcome is.
Key Considerations:
Investment:
Businesses might delay major investments or from signing off on purchase orders until after the election. Once they have a clearer picture of what future policies are likely to be, they may revisit spending and investment decisions that haven’t been committed to yet.
Consumer Spending:
Consumers may become more cautious and reduce their spending. This can particularly impact retail and service-related businesses.
Currency and Financial Markets
Elections can also impact financial markets and currency values. Investors react to the anticipated and actual outcomes of elections, which can lead to volatility in stock markets and fluctuations in currency exchange rates. For businesses, especially those involved in international trade, such volatility can affect profit margins and pricing strategies.
Key Considerations:
Stock Markets:
Election outcomes perceived as business-friendly may lead to market rallies, while those seen as unfavourable could cause market declines.
Currency Values:
Changes in government policies on trade, fiscal stimulus, and economic management can lead to currency appreciation or depreciation.
Public Spending and Infrastructure
Government spending priorities can shift significantly with a change in administration. A new government may prioritize different sectors for public spending, impacting businesses associated with those sectors. For example, increased spending on infrastructure can benefit construction companies, while cuts in public services might adversely affect healthcare providers.
Key Considerations:
Infrastructure Projects:
Businesses in construction and related industries may see new opportunities open up to them.
Public Services:
Businesses providing services to the government may experience changes in demand based on shifts in public spending priorities.
Employment Market
The employment market is another area where general elections can have a profound impact. Policies on minimum wage, worker rights, and immigration can affect costs and your ability to recruit the right workers for jobs.
Key Considerations:
Wage Policies:
While a further imminent increase seems unlikely, changes in the policies around minimum wage laws could increase employment costs for businesses. Businesses in low-margin industries can be particularly sensitive to these changes.
Immigration Policies:
Adjustments in immigration laws can affect the availability of skilled and unskilled labour, with knock-ons to your recruitment strategies and employment costs.
I look forward to the eventual outcome of the 2024 election and hope that it will, at least, bring some certainty and stability to the UK and our economy.
More indicators of a cut in interest rates to come
The European Central Bank (ECB) has reduced its key interest rate by 0.25%, signalling a global trend towards reducing borrowing costs, a decision that could have widespread implications for home buyers, savers, and investors.
The ECB's benchmark rate now stands at 3.75%, down from a record high of 4%. According to an ECB statement, "price pressures have weakened, and inflation expectations have declined at all horizons,"
Also, the Bank of Canada announced a cut of 0.25% to its key interest rate last week, bringing the rate down to 4.75%.
Canada is the first country in the G-7 to cut rates. The Canadian central bank was confident that inflation was moving towards its target of 2% and was willing to make the cut.
Economists predict that this will start a move across the G-7 economies to cut interest rates, which would be good news for UK businesses. The International Monetary Fund (IMF) has also recommended that UK interest rates could be cut to 3.5% by the end of the year.
More information here: Rates should be cut to 3.5% by end of 2025, IMF says - BBC News
Choosing passwords: the three random words method
With our personal and work lives now requiring us to have so many passwords, it is difficult to keep coming up with new passwords.
The National Cyber Security Centre (NCSC) has been championing the three random words method as a strategy to help with this problem. This method involves choosing three words at random and combining them to make a password, such as humbledeskbeats.
In recent years, much advice has been given about using long, complex passwords that contain random letters, numbers, and symbols. However, generating, remembering, and entering this kind of password is impractical for most people.
While a random password created by a password manager may be the strongest option, NCSC notes that the take-up of password managers remains very low.
The three random words method is considered to be long enough and strong enough for most purposes and is easy enough for most people to understand and use.
NCSC also says that writing down your password is okay, as long as you keep the note somewhere safe.
More information here: Three random words - NCSC.GOV.UK
I hope you found the above useful.
Please don't hesitate to contact us if you have any questions about your business or tax affairs.
Martin Caruana