Published Tuesday 17th December 2019

When Boris Johnson called for a snap winter election in late October, he would have been hopeful but perhaps unexpectant of such an emphatic result. Thursday 12th December 2019 saw a seismic shift in British politics, much of which has been stuck in limbo ever since the result of the Brexit referendum in 2016. The business response to the outcome has mostly been positive, but what will the tangible effects be on UK companies over the next few years, now a controlling majority has been firmly established?

The 2019 UK Election Result Explained

As soon as the exit polls were declared after voting had closed, the result became clear. Once all constituencies had been announced, it emerged that the Conservatives had won a parliamentary majority of 80 seats. A big swing in the voting behaviour of people who wanted to leave the European Union led to the Conservatives’ best result since the 1980s. By contrast, the election represented the worst result for Labour since the 1930s.

As previously mentioned, Brexit played a substantial role in producing the scale of these results. A clear leave option presented by the Conservatives won over against a Labour stance perceived as neutral, whilst other parties helped to split the remain vote. A notable election result was also seen in Scotland, where the majority of people voted to remain in the European Union in 2016. Here, 48 of 59 seats were won by the Scottish National Party, making them the third strongest group in the UK parliament. Both Conservatives and Labour lost seats in Scotland, whilst Wales saw a slight shift from Labour to the Conservatives, although the former retains a majority. There were only minor changes in the parliamentary picture regarding Northern Ireland.

What to Expect from Brexit

The primary reason the general election was called for December by Boris Johnson was to help him create a parliament that could enact his Brexit proposals. That appears to have been emphatically achieved and, for better or worse, it is highly likely that the UK will formally leave the EU on 31st January 2020. A Conservative majority is expected to ratify the Withdrawal Agreement Bill created by PM Johnson, meaning the UK will leave the EU with a transitional deal. This agreement will allow UK businesses to continue trading with the EU in much the same way they currently do, whilst both sides look to ratify a long-term relationship agreement.

Beyond 31st January, a degree of uncertainty remains. As it currently stands, the UK and the EU have until December 2020 to agree on the future relationship agreement, encompassing all aspects of our future partnership with the economic bloc, including trade and beyond. To reach that target, a deal in principle would have to be completed by the end of June next year. Given the EU’s nature and how everything has to be agreed by all members, getting an agreement in place is seen as highly unlikely.

The expectation was that the UK would agree to an extension of either one or two years to allow time for negotiations to take place. However, Boris Johnson has repeatedly made clear his unwillingness to extend the transition period any further. With such a substantial majority, the Prime Minister should have the power to refuse an extension, which potentially increases the likelihood of a no-deal Brexit at the end of next year.

Potential Policy Changes in New UK Government

Beyond Brexit, it’s not clear exactly what changes businesses should expect from the Conservative majority government. However, for the most part, it appears that progress will continue on pledges made when Boris Johnson first became Prime Minister in July 2019. Most key cabinet ministers that were introduced when he first became Prime Minister have been retained, whilst a noted lack of substance regarding other policies in the General Election means that it is difficult to draw any notable conclusions.

Overall, the business response to the election result was primarily positive. The Pound Sterling strengthened in value following the election, whilst most business groups released statements expressing their relief at the clarity that the result gives, particularly regarding Brexit. However, there is still an element of caution regarding any celebrations. Whilst short-term assurances will help businesses, the dangers of a no-deal Brexit remain in the distance. There is also a myriad of domestic issues to be resolved over this government’s term, including infrastructure and skilled labour, on which they will be equally judged.

With uncertainty remaining a long-term issue, British businesses can continue to ensure their foundations are solid by evaluating their current supply chain practices. Here at Expense Reduction Analysts, we’re experts at helping major UK businesses refine their procurement strategies long-term. Our cost reduction consultants have worked with companies in a range of industries and helped to save millions across a variety of cost areas. If you’re interested in performing a thorough evaluation of your current supply chain practices following the election, why not get in contact with our experienced team today and see what we could do for you?