As is the case when any new Prime Minister is confirmed in the UK, elements of uncertainty cloud the future of the economy. This is perhaps truer than ever following the announcement that Boris Johnson will be the countries next Prime Minister, replacing Theresa May as the Prime Minister to steer the UK through Brexit, which is due to happen on the 31st October 2019.
Johnson’s ‘do or die’ attitude to Brexit, which could result in a no-deal, has put a number of businesses on alert, with many considering this the worst possible outcome for their business.
Others, however, consider a no-deal an opportunity to remove uncertainty and move on from Brexit, despite the potential damage it could cause.
We have collected reactions from industry figures and the wider business community, giving their thoughts on the appointment of the UK’s new Prime Minister.
IMF
The day before Boris Johnson went to meet the Queen to be officially confirmed as Prime Minister, the IMF warned that a no-deal Brexit could throw the global economy off-course, ranking risk to the economy as being similar to US trade policy.
The IMF said: “The principal risk factor to the global economy is that adverse developments including further US-China tariffs, US auto tariffs or a no-deal Brexit sap confidence, weaken investment, dislocate local supply chains and severely slow global growth below the baseline.”
ACCA
A spokesperson for ACCA said it was vital that Boris Johnson ensures UK continues to attract the best international talent, while protecting professional qualifications and services in the future.
They said: “‘It is absolutely imperative the UK upholds its status and reputation as ‘global Britain’ by continuing to be open to those wanting to work and study here.
“Closing the skills gap is key to maintaining global competitiveness and there must be a commitment to ensuring employers are able to access international talent to fill critical and vacant roles.”
The ACCA also suggested reducing the threshold for international students and workers from £30k to £20k, “to ensure the country has access to a large talent pool.”
“We must ensure new bilateral agreements protect and bolster the strengths of all UK trading industries and we must not overlook the need for continued and seamless trade in services which represent a £83.4bn trade surplus,” they said.
‘The UK currently benefits from a level of soft power influence granted by the continued recognition and trust in UK services, and the presence of UK qualified professionals performing highly-skilled regulated roles in international markets.
“As we move forward with trade agreements, it is vital Government champions our world-renowned professional services industries by ensuring mutual recognition of professional qualifications in any free trade agreement.”
HURST
Tim Potter, chief executive of accounting and business advisory firm HURST encouraged Boris Johnson to reach out to private businesses and work with them more closely.
He said: “Private business is dynamic and can respond quickly to change, but it needs certainty to promote investment and the freedom to trade internationally and competitively with as little friction as possible.
“A great starting point would be for Boris Johnson to set out to gain some trust and build the confidence of business in his government.
“Business thrives on a platform of certainty and flourishes with a business-friendly government.
“Our clients face a multifaceted challenge from Brexit, which is causing them to defer investment and tread cautiously. There is also considerable anxiety among many clients, particularly those who trade internationally.
“History shows that international trade propels our economy forward, yet import costs continue to rise as a result of the weak pound, international customers are looking elsewhere to solidify their supply chain and a Damocles sword of tariffs on our EU exports hangs over clients.
“This, combined with potential EU border friction, is causing unease. The general threat of a UK recession is a worry. Add to this the political instability and deep concern over a hard-left government that is not likely to be business-friendly, and there is every reason to not be optimistic.”
deVere Group
Nigel Green, chief executive and founder of deVere Group, said that he thought Johnson would be an ‘impotent’ Prime Minister, but that he could use this to his advantage.
“After a series of defections from serving MPs and the potential loss of two seats in by-elections, the Conservatives’ parliamentary tiny majority is on the brink of collapse.
“This arithmetic, together with the fact that the EU has shot down Mr Johnson’s Brexit plan within moments of his appointment as leader – signalling it has no plans to make concessions – makes the job of leaving the European Union with a deal almost impossible. No deal is looking increasingly likely.
“Yet this impotency is likely to be Boris Johnson’s secret weapon.
“This is because all he has to do is do nothing to ensure a no-deal happens by default on 31 Oct. Then in early November, he will call an election being able to claim to have delivered Brexit.
“This will secure him votes from right-wing Conservatives and Brexit Party supporters, he will be capitalising on a Labour Party with low poll ratings for its leader, and making Liberal Democrat opposition to Brexit and their call for a second referendum irrelevant as the UK would have already left the EU.”
“Whilst it is a huge gamble – and one he seems willing to embrace – a quicker and cleaner exit from the EU could indeed deliver an unexpected boost for the pound and the UK economy as international and domestic investors get the clarity they crave before stepping off the sidelines and investing in Britain.”
Colliers & Greater Birmingham Chambers of Commerce (GBCC)
John Webber, head of business rates at Colliers, said Boris Johnson must think past Brexit and address the negative impact the 2017 Revaluation process had on UK companies.
Mr Webber said: “The move to four-yearly revaluations is all very well, as is the move to link business rates rises to CPI as opposed to RPI increase.
“But in themselves they will not solve the crisis. Nor will the decision to give business rates relief to the smaller traders do anything to help those big retail chains that are suffering.
“It’s the Debenhams, the House of Fraser, the M&S’s that are either on the CVA list or closing stores and cutting the jobs and none of them come in the under £51,000 RV+ bracket, which is where the last Chancellor has provided the most help. I just don’t understand why nobody in Government has clocked this.”
Colliers and GBCC are calling on Johnson to do the following:
- Immediately freeze any further business rate increases next year. Few businesses can cope with yet another rise on top of unprecedented rises in the last few years.
- Immediately remove downward phasing of business rates payments enabling rate payers to pay their true rates liability now and not wait four years to do so.
- Review and implement a policy to reduce the multiplier from 50p to 34p in the £1. The current level is effectively an unsustainable 50 per cent tax.
- Reform the whole systems of complicated reliefs to avoid business rate deserts in some parts of the country. All businesses should pay something for the services they receive, but if the multiplier was reduced to a manageable level, it would not provoke the crisis it is at the moment.
- Look at other reliefs, such as agricultural reliefs which may need reforming, spreading the load more evenly across the UK economy.
- Reform the appeals system, providing more support to the VOA to deal with existing appeals’ backlog. It is essential that businesses have a true and fit for purpose appeal system, if they believe they have been assessed unfairly.
- Plan to Move to Annual Valuations. Annual valuations are ideal, but can only be achieved with a fully funded VOA and an appeal system that is fit for purpose.
Paul Faulkner, CEO of Greater Birmingham Chambers of Commerce said: “Coupled with uncertainty created by Brexit, firms up and down the country are facing severe price pressures right now and it was no surprise to see a sharp increase in the number of companies concerned about rising business rates in our latest Quarterly Business Report.
“While Mr Johnson is understandably fixated on securing Britain’s withdrawal from the European Union, it is essential that he also concentrates on fixing the fundamentals of the domestic economy in a bid to strengthen its competitiveness.
“Introducing a freeze on rates, simplifying and making this outmoded system fairer would be a good start and to echo the sentiment projected by the incoming PM in his victory speech, the hard work needs to start now.”
John Webber added: “Business rates contribute £26 billion to the country’s coffers and is a vital source of income for local authority funding. Putting the burden of who pays it on an ever-decreasing number of companies is both fool hardy and dangerous, particularly if such bills are the last straw that breaks the camel’s back.
“The new prime minister has said he wants to support business and as Mayor of London he did call for a cut to business rates. I really hope he can navigate us through the Brexit negotiations and then turn to the choppy waters of Business Rates – before they finally overturn the ship, lifeboats and all! Let’s see if he follows through when he gets his hands on the tiller. The jury is indeed out!”