By year end, over half of the world’s population will have participated in a national election.
With so many voters going to the polls, and the potential for disruptive transitions, concerns
about widespread political uncertainty have been chipping away at economic sentiment for
much of 2024. Given the wider global economic and geopolitical headwinds, this uncertainty
risks dragging much of the world – not least the UK – into recession, scuppering the ‘soft
landing’ that central banks have been trying desperately to deliver. Unless the world’s
leading governments – His Majesty’s Government included – double down on meaningful
engagement with business leaders to shape the forward policy agenda, the world’s major
economies are heading for years of economic stagnation.
By its very nature, democratic politics generates a base level of policy instability. But even
accounting for that inherent unpredictability, the surprises that electorates have thrown up so
far this year have given global business leaders some confounding new political landscapes
to navigate. In the face of this political uncertainty, the collective voice of national business
communities is more important than ever – it’s time private sector leaders found it and
governments listened.
With less than a month to go before Americans head to the polls, businesses have already
been anticipating increasingly volatile markets for months. With Vice President Kamala
Harris taking up the 2024 Democratic nomination, we have a candidate who, while promising
for a host of reasons, has had less than 100 days to make her positions known to voters.
After initial momentum swung in behind Harris, polls now point to coin-toss of a contest,
likely putting key long-term business decisions on hold given the wildly different yet equally
plausible policy platforms of both candidates.
Turning to other markets, India’s coalition government, instead of a Modi landslide, has
forced investors to rethink strategies on the sub-continent. In South Africa, Jacob Zuma’s
crafty rearguard action resulted in an unexpected coalition government, which complicates
already muddied waters for investors. In Europe, France’s National Assembly earthquake
election now threatens the legacy of Macron’s economic reforms, while Austria faces
instability as the far-right Freedom Party’s narrow win leaves businesses in doubt as to who
will govern in Vienna. And if that wasn’t enough, Japan’s new Prime Minister has called snap
elections to happen in a matter of weeks.
Here in Britain, we were promised stability, but the mood feels febrile. The upcoming budget
is casting a long dark shadow, as businesses fret over what will emerge from the
Chancellor’s Red Box on 30 October. Having weathered a cost-of-living crisis, soaring
inflation, higher borrowing costs, and trade tensions, the political groundwork done to
prepare for the budget has put a real dent in confidence. Despite the narrative of impending
economic doom, the upcoming Budget represents a chance to shift the narrative by
reshaping our economic discourse, and businesses must rise to the challenge by engaging
proactively with the Government down this final stretch.
Should the worst come to pass, the private sector will need to respond. As the Chair of the
London Chamber of Commerce and Industry, I’m in constant contact with businesses across
all sectors and ranging in all sizes. From my engagement with them, it is clear that we need
to push for three fundamental pillars to achieve the growth that the Government has
committed to deliver.
First, we need a tax system that will mobilise private capital, not send it running to
jurisdictions abroad. At the same time, public investment will also be key to the economic
transformation we need. By strategically channelling funds into sectors that enhance
productivity, we can cultivate an economy which can be fuelled by sustained growth. Our
focus must shift from short-term fixes to investments in the infrastructure and industries that
will shape the UK’s future.
Second, planning reform needs to happen to unlock the UK’s potential and ramp up
productivity. Bureaucratic red tape and outdated regulations are stifling growth opportunities.
We need agile, forward-looking planning policies that allow businesses to expand and
innovate. Government must engage with stakeholders to craft a more dynamic framework for
growth.
Finally, we must make sure that we cultivate a workforce capable of competing on the global
stage. To keep Britain open for business, the government must attract and retain the best
talent from around the world. The industries that will define our future—AI, green energy, and
life sciences—rely on a highly skilled and mobile global workforce. While we need to see a
boost in investment in skills in the UK, we must also ensure that visa and immigration rules
adhere to the needs of businesses. Restricting businesses from accessing the best global
talent is not only damaging to individual firms, but a blow to the UK’s economy and our future
prosperity.
While this list is by no means exhaustive, it would give British business the foundation
needed to get back to sustainable growth. With so much of the world reeling from political
uncertainty, Britain has returned to stability. But if we cannot use that stability to generate
share prosperity then what is the point? A strong voice for business and a willing ear from
Government is the only way to do that.
Julia Onslow-Cole is Chair of the London Chamber of Commerce & Industry and a Partner at
Fragomen