Businesses wait for govt.’s Brexit stance

The British general election last week has done little to remove the uncertainty facing the business community and Britain’s international partners as it delivered a shock hung Parliament, forcing the government to turn to the right-wing Northern Irish Democratic Unionist Party (DUP) for support.

The government will in all likelihood be able to get its now to-be-delayed Queen Speech (the details of the laws it hopes to pass, which will be announced by the government) through the House of Commons, with the backing of the DUP, with which it is in the midst of agreeing a “confidence and supply” agreement.

This would essentially mean the DUP will support it in any votes of confidence, and on matters relating to government spending and budgets. However, the business sector remained spooked, with a snap poll of business leaders conducted by the Institute of Directors in the U.K. finding a drop in confidence following the election.

Perhaps the most significant of all for businesses, including the 800 odd Indian firms in Britain, will be the government’s stance on Brexit, and whether the result will force the government to revisit its plans to deliver on a so-called “hard Brexit”, moving out of the customs union and single market.

The Conservative party has long been divided on this issue, and with the resignation of Ms. May’s two senior aides, as well as the renewed confidence of those in favour of a softer Brexit, the chances of customs union membership remains higher than ever before. This is all the more so, given the alliance with the DUP, for whom an open border with the Republic of Ireland is a priority.

Speaking out

Since the election there has also been an increased willingness of businesses — a voice little heard from during the campaign. Alongside the IOD report, a study by the Harvard Kennedy School of Business, authored by former Labour Shadow Chancellor Ed Balls and Peter Sands, the former head of Standard Chartered, highlighted the concerns of medium and small business regarding Brexit, and in particularly the persistence of higher tariffs and customs controls on their costs and competitiveness.

While any moves for a softer Brexit would be welcomed by Indian businesses — for whom tariff-free access to the EU as well as its talent pool is important — there will be also questions over Britain’s approach to the rest of the world.