What the Tories Mean for Business

By raising the Structures and Buildings Allowance (SBA), a tax relief allowing businesses to invest in the construction and conversion of non-residential buildings and structures, from two percent to three percent, Conservatives hope to make it easier for companies to purchase, build, or liaise, making the economy more dynamic.

The party says it will increase businesses’ allowance to spend on research and development by one percent. Through this, the Conservatives claims private companies will see a spike in productivity, particularly in manufacturing, science and technical services.

The most impactful action the Conservatives promised following a majority win is reducing business rates. The party hasn’t yet broken down potential costs and percentages, but claims it will launch a “fundamental” review of their budget once re-elected.  

For now, it looks like Johnson’s main goal for businesses is to facilitate their development in various areas by cutting taxes. It will be interesting to see how these proposals develop as Brexit negotiations unfold, as it’s still unclear whether the UK will leave the EU in the near future.  

But what has the morning post-election brought us?

With Brexit looming on the horizon – and lots of uncertainty surrounding our exit from the European Union – many businesses are apprehensive about what will happen to British trade.

Unfortunately, we’re still not certain what Brexit will bring (unhelpful, we know). We’re still unsure as to what the terms of a new trade deal with the EU will entail – especially as a no deal remains firmly “on the table” for the end of 2020.   

It’s still hard to know what the end of free movement of labour with the EU and whatever happens to migration more widely will do to the labour market, ie employment and wages (because, again, all we can assume is there will be a “points-based system”, which means nothing); and nor do we have much idea of exactly how the wider global economy will develop.

Following the Conservative win, the pound and shares surged, with sterling gaining 1.9 percent to US$1.34 – the highest level since May 2018 – on the hopes that a majority win will remove Brexit uncertainty.

Similarly, the pound jumped to a three-and-a-half year high against the euro.

The FTSE 100 share index rose 1.5 percent, while the FTSE 250 – looking at more UK-focused shares – leapt 4 percent, hitting record highs. Although the FTSE 100 saw big gains, the rise in the value of the pound will see companies with big international operations affected – cutting the value of the companies’ overseas earnings when they’re exchanged back into the UK and converted into pounds.

Prime Minister Boris Johnson said the election result meant that the Conservative government "has been given a powerful new mandate, to get Brexit done". Mr Johnson has pledged – and remains adamant – that the UK will leave the European Union by 31 January.

For now, the country has a waiting game on its hands to see what benefits – and upsets – a Conservative government will bring.