Welcome, here is your free article

Every week, The Week hand-selects the most important news stories and expertly edits them together in one fascinating read. For more excellent, distilled content like this, get your FREE issue today »

What does a hung parliament mean for Brexit and business?

What does a hung parliament mean for Brexit and business?

The aftermath of the shock result of a hung parliament is going to be dominated by implications for Brexit negotiations, which are due to start in 11 days' time. So how is the business community reacting?

Fear of 'paralysis'

Brexit was already a key source of uncertainty for businesses and the lack of a clear result and even the chance of another general election this year is exacerbating that.

Companies from financial services to carmakers had been pushing for clarity on any transitional arrangement with the EU, as well as on issues such as the rights of EU workers in the UK and tariffs and customs checks if the country leaves the single market.

It's unlikely they'll be getting any answers soon - and that is a worry for business leaders.

"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," Stephen Martin, director general of the Institute of Directors, told the Financial Times.

Delays likely

With no obvious answer to how a stable government can be formed, Brexit talks will probably get pushed back. For some, that has the upside of encouraging the sort of transitional arrangement that guarantees current EU trading rules will be in place for longer.

Mike Cherry, chairman of the Federation of Small Business, said: "Negotiations should be led by a government and a prime minister that will be in place for the duration and so we call for a delay to the scheduled start of negotiations rather than a rush to begin in 11 days' time. "The need for a transition period now becomes even stronger, providing the time to get Brexit right."

Going soft

More than just delaying things, businesses hope the less clear mandate for the Tories could mean the party's manifesto vision of a hard Brexit with tough immigration curbs is now less likely to happen.

A hung parliament still leaves the Conservatives the party expected to form a government, which will please those in the business world who were worried about a Jeremy Corbyn-led administration.

But it also weakens the Tories' hand and puts a big question mark over any supposed mandate for a hard Brexit. "Market reaction has generally been subdued so far because the Tory government will remain in power but a hard Brexit now looks less likely," Mark Dampier, head of investment research at Hargreaves Lansdown, told the Daily Telegraph.

More free articles from
The Week magazine

6 week FREE trial - Try The Week today
Election 2017: Why did Theresa May call a general election and what happens next?

The Prime Minister repeatedly said she would not go to the polls, yet the country is preparing for another campaign.

Read the full article here »
The cost of a general election

When voters go to the polls on 8 June, millions of pounds will have been spent on getting them there

Read the full article here »
Nessie: the truth at last

The longest-serving investigator of the Loch Ness monster has concluded that the beast probably is – or was – a catfish

Read the full article here »
Leaving London

Thousands of thirtysomethings and lower-income families are giving up on the capital, or being driven out

Read the full article here »
The magical fairyland of Luxembourg

Small, secretive and trilingual, the Grand Duchy of Luxembourg has punched above its weight for more than a thousand years

Read the full article here »
We hope you enjoyed your free article from The Week magazine.

Try a FREE issue today and enjoy getting to know the whole magazine. Enter your details below.

Try a FREE issue of The Week.

Fill in the form below and a representative will call you to arrange delivery.