Hung parliament “disastrous” for UK economy, says IoD

Political uncertainty following June’s general election has caused concern among the business community, a study has revealed.

The Institute of Directors (IoD), which published the study, said its members see no clear way to quickly resolve the political situation, but a further election this year would have a negative impact on the UK economy.

Its poll of almost 700 members revealed that 65 per cent believe uncertainty is a “significant concern” for the UK economy.

Likewise, some 57 per cent now feel either “quite or very pessimistic” in regards to the future of the UK economy – a 34 per cent swing from the same study in May.

And more than half (59 per cent) believe a further election later this year would be “somewhat or very unwelcome”. Just 23 per cent said they would welcome a second election.

When asked to choose significant areas of Brexit negotiations which should be prioritised by the new Government, 58 per cent believe rights and entitlements for EU citizens in the UK and vice versa is most important.

This is followed by 38 per cent believing that a “zero for zero” deal on trade tariffs should be secured.

Stephen Martin, Director General of the IoD, said: “It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy. The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new Government.

“Business leaders will be acutely aware that Parliaments without majorities are more prone to politicking and point-scoring than most. If we do indeed see a minority Government, both sides of the aisle must swallow their pride and work on a cross-party basis on the most important issues. 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.”