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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.

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