The tabloids are saying a Labour victory would be a disaster for the economy. I suppose it depends which part of the economy you inhabit. Let’s unpack it a bit.

  • Labour’s promises of higher levels of Income Tax and Corporation Tax don’t sound attractive if you are in business. There are, however, a few points to balance that.
  • Higher levels of Income Tax won’t affect those like me who earn less than 80,000 a year. If I do get into that bracket, I won’t mind paying more tax: I’ll still be better off. I still have an incentive to work hard and be innovative.
  • Corporation Tax will affect you more if you are making large profits. I’s still prefer to make a larger profit than a smaller one. OK – for some businesses, the extra tax could mean the difference between a project being worthwhile and… not.
  • Labour’s plans for nationalization, or re-nationalization, of various industries will matter most if you are in one of the industries about to be nationalized.  In the long run, it depends on whether the government can manage those industries better than the present management. Better for whom? Shareholders? Directors? Consumers? A lot of businesses would benefit from a better regulated market in utilities and from more efficient railways.
  • Labour’s general plans for more government spending will benefit businesses on whose products or services the money is spent.
  • Money spent on education and training will benefit businesses when we start finding school-leavers are better prepared for the workplace. Of course, that could take some time to work  its way through to your business.

Now for the Big Risk.

Brexit.

I have said before that leaving the EU could be good or bad, depending on the new arrangements we worked out. A Hard Brexit would most probably be bad. Very bad.

  • Losing access to European markets, or having to overcome tariff and administrative barriers.
  • Similarly, having difficulties with supplies coming from Europe.
  • Losing workers who are non-British EU citizens.
  • Being unable to move key employees around between Britain and Europe.

All these things would probably damage most businesses far more than higher Corporation Tax. After all, if you don’t make a profit, due to lost sales and higher costs, you won’t care about tax rates.

I have also said that I expected most EU legislation to remain effective in the UK, as it would almost certainly be an essential element of any trade deal. Much of it is desirable for other reasons anyway. Yet I have heard worrying rumours that there will be a great deal of pressure from some elements of the Tory Party and of the tabloids (is that a tautology?) to scrap most EU legislation around such things as

  • workers rights
  • equalities
  • H & S
  • the environment

To do so would be possible only in the event of an extreme Brexit. We need to think carefully whether some savings in costs and reductions in bureaucracy outweigh the long-term damage to society and the environment. These are risks we need to manage.

There is a choice. But it is far from straightforward. There are big risks. Which risks are most important to you and your business?

 

Risk Dice