Insurance 23 May 2017

What the 2017 election manifestos mean for small business trading prospects

2017 election manifestos
What do each of the 2017 election manifestos mean for future trade?

Writing for Business Advice, Gary Lynch, CEO of global trade organisation GS1 UK, unpicks the 2017 election manifestos from Britain’s three main political parties to find out what the trading outlook could look like for small business owners after 8 June.

GS1 is committed to facilitating cross border trade, through our globally-accepted system of standards based on the principles of enabling interoperability between trading partners. Our standards underpin supply chains and ecommerce around the world.

Our work with the World Customs Organisation helps improve the effectiveness and efficiency of customs administrations across the globe, enabling trade while ensuring its security.

But cross-border trade is under attack. For decades there has been a consensus that globalisation brings more jobs, higher wages, and lower prices. That’s changing.

Donald Trump’s inauguration speech proclaimed a new age of American protectionism. Following his inauguration, he removed the Transatlantic Trade and Investment Partnership from the White House website and denounced its Pacific equivalent for setting out to “rape” the US economy. And the resurgence of protectionism is not a solely American phenomenon.

Governments took more than 400 discriminatory actions against foreign competitors between January and August 2016. Compared with the same period in 2009, four times as many protectionist measures were introduced. Marine Le Pen regularly attacked trade, globalisation and the “Thatcherite” policies of her opponents in the race for the French presidency.

Brexit, too, offers huge challenges to Britain’s trade. Leaving the EU is the most significant economic and political event for a generation. Some commentators have predicted that Britain’s growth will be constrained by a decline in trade, investment and labour flows.

Recently we published research outlining an overt course of action for the next government to follow to facilitate trade, drawn from a poll of our 31,000 members – 58 per cent of whom are SMEs with turnover lower than £500,000.

The 2017 election manifestos

How did the pledges in the 2017 election manifestos compare to their requirements and aspirations? Business Advice has asked us to cross-reference the manifestos with our findings and see what the three main political parties are offering by way of support for small businesses.

When we asked our members employing fewer than 50 people if they wanted the government to restrict the free movement of labour, just 32 per cent said they did.

While the free movement of people proved politically unsustainable in the run-up to the referendum and is bound to be curbed in the course of Brexit, free movement of labour may not be dead. There is nothing to stop the next government offering businesses flexibility in attracting skilled labour, perhaps even giving preference to EU workers.

Business is also worried by the interplay between curbs to immigrations and access to the EU in the Brexit negotiations. When GS1 UK polled our smaller members, just seven per cent said reducing immigration was more important to the future of their business than barrier-free trade with the EU.

Given the Tory manifesto explicitly says “we will reduce and control immigration”, and that the Labour manifesto says freedom of movement will end when we leave the European Union, the Lib Dem manifesto would appear to be the one most closely matching the requirements of business. They pledged to make “the positive case for immigration” and say that “immigration is essential to our economy”.

National infrastructure

Two-thirds of our smaller members told us they want the next government to tackle domestic infrastructure “as a matter of urgency”. The UK looks set to struggle to complete the planned 225km High Speed 2 rail line by its proposed opening date of 2026.

To put our level of investment into perspective, in that time, China will have opened 30,000km of high speed rail. In its manifesto, the Conservatives promised the largest investment in railways since Victorian times.

Given that 76 per cent of our members use online marketplaces platforms – such as eBay, Amazon, Google Shopping or Alibaba – to sell their goods before they are transported anywhere, the Labour Party’s pledge to deliver universal superfast broadband availability by 2022, is bang on the money.

Some 66 per cent of our smaller members want the government to lower corporation tax to 12.5 per cent – similar to Ireland. Corporation tax is due to fall to seventeen per cent by 2020 – the lowest rate of any major developed economy – and, in their manifesto, the Conservative Party said it will stick to that plan.

Labour meanwhile said it would reintroduce the lower small profits rate of corporation tax but also mentioned it will ask large corporations to pay more.

The Lib Dems were probably the furthest from our members’ view. It has said they would reverse a number of the Conservatives’ tax cuts, including the cutting of corporation tax from 20 per cent to 17 per cent.

Some 62 per cent of our smaller members tell us they want to see better access to export financing for SMEs. The only manifestos that talked about export finance was that of the Conservative party with the Tories saying they will put UK Export Finance, which ensures that no viable UK export fails for lack of finance or insurance, at the heart of the UK’s trade promotion proposition.

The tone of the Conservative Party manifesto was striking, with its explicit declaration that “we do not believe in untrammelled free markets”.

It’s not the first time Theresa May has looked interventionist. At the start of the year, the government published a Green Paper to create a “proper industrial strategy” for Britain intervening in the economy to correct perceived imbalances.

We thought that the prime minister’s talk of a proper industrial strategy, with more active intervention into the activities of the economy, would be unpopular with industry. We were wrong. When we asked our smaller members if they thought Britain should have a proper industrial strategy, 88 per cent agreed Britain should have a proper industrial strategy just ten per cent disagreed.

Even at her least laissez-faire, the prime minister appears on safe ground with small business.

Gary Lynch is the CEO of GS1 UK

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