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Financial News: Hung Parliament Causes 'Dramatic Drop' In UK Business

Hung Parliament Causes 'Dramatic Drop' In UK Business Confidence: Survey

06/12/2017 - 06:25:00 (RTTNews)

(RTTNews) - UK business confidence sharply deteriorated following the inconclusive election on June 8 and business leaders are very concerned about the impact of the political uncertainty on the Brexit talks, a survey by the Institute of Directors showed Monday.

"There has been a negative swing of 34 points in confidence in the UK economy from our last survey in May," the IoD said.

While 20 percent are optimistic about the UK economy over the next 12 months, some 57 percent are now either quite or very pessimistic - a -37 'net confidence' score, the survey said. That compares with May, when 34 percent registered their optimism, and only 37 percent reported pessimism, resulting in a -3 reading.

"It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could - if not addressed immediately - be disastrous for the UK economy," IoD Director General Stephen Martin said.

"The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new Government."

In the June 8 election, Prime Minister Theresa May failed to secure a majority, which she hoped would give her a steady hand during the exit negotiations with the European Union.

May has opted to form government with the support of a smaller party, the Northern Ireland's Democratic Union Party.

"The last thing business leaders need is a Parliament in paralysis, and the consequences for British businesses and for the UK as an investment destination would be severe," IoD's Martin said.

The survey carried out among nearly 700 members of the institute showed that 65 percent felt the political uncertainty was 'a significant concern' for the UK economy. Add to that the 27 percent who described the event as a 'slight concern' - a total 92 percent of those surveyed believe the hung parliament is a concern, the study found.

Further, 59 percent of those surveyed believed a further election later this year would be somewhat or very unwelcome.

IoD members also suggested that the new government should quickly agree a deal with the EU on rights and entitlements for EU citizens in the UK and vice versa.

Also, 86 percent felt striking a deal on transitional arrangements was 'somewhat' or 'very' important and 72 percent said that striking a new trade deal with the EU must be the new government's first priority.

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