As the UK wakes up to a landslide victory by the Conservative Party, in an election which saw the worst defeat for Labour since 1935, the UK’s Big Four react to the news
Brexit has been the dominant topic on the campaign trail. The Conservative’s pledge ‘to get Brexit done’ has resonated with many voters in traditional Labour seats in the north of England who voted to leave the European Union in the 2016 referendum.
One of the first seats to declare, Blythe Valley, a safe labour seat since 1950, turned blue with the election of Conservative candidate Ian Levy, was the first to signal that the exit polls would likely be accurate in its prediction of a large Conservative majority.
With a Conservative majority it looks as if Boris Johnson’s Brexit deal will be passed, paving the way for the UK’s exit from the EU on 31 January 2020.
Commenting on the results, KPMG UK vice chairman and head of Brexit James Stewart said, “Business will welcome the clarity of the election outcome. However in terms of the Brexit deal, the attention will be on the final exit deal in 12 months, rather than the transition deal at the end of January.
“The Government’s two priorities for the next 12 months should be securing a good Brexit deal and getting the UK back on the path to growth – for example, investment in infrastructure and upskilling the UK workforce.
“Businesses and people will also be hoping for an inclusive government that addresses the divisions in society and achieves a better future across the UK.”
Deloitte’s global Brexit lead Amanda Tickel said, “The uncertainty around whether or not Brexit will actually happen ends today; but there’s still big questions as to the form it will take.
“The result does however provide greater clarity on the UK’s political outlook and moves the country into a new phase. Businesses must get ready, while wider attention can now turn to the hugely important question of Britain’s future trading relationship with the EU.
“Although there’s an understandable feeling of extension exhaustion – with many businesses having already partially implemented restructuring, stockpiling and logistics plans – there’s still thousands who have done virtually nothing. There can be no further delay.
“Some changes are known, such as the freedom of movement ending. But many – including access to services, tariff arrangements and data management – are all still on the table. Time must be spent looking at the content of the withdrawal deal and preparing for the new UK-EU trade arrangements, to be ready for this new era of UK business.
Tickel concluded, “The return of a majority government also provides an important opportunity to focus on the post-Brexit challenges the country faces – unlocking business investment, strengthening the building blocks of the economy, improving skills and raising social mobility.”
EY UK’s head of tax policy Chris Sanger said, “As the UK woke up to the news that the Conservatives have a significant parliamentary majority, many will now be starting to ask what the proposed tax changes outlined in the party’s manifesto and in comments made during the election campaign might mean in practice.
“While there is an element of ‘business as usual’ from a tax perspective, the election campaign did signal a shift in emphasis, not least with the cancellation of the scheduled cut in next years’ corporation tax rate and the references to reforming entrepreneurs’ relief and limiting arbitrary tax advantages for the wealthiest in society. Beyond this, progress on Brexit may also produce issues to be resolved for the new world after we leave the EU. The scale of the Conservatives’ victory not only gives momentum to the Brexit process, but leaves the Government with some flexibility over the detail of the negotiations on the desired Free Trade Agreement.
“The manifesto set out some of the Conservative’s thinking, and the promised Budget in February will give taxpayers the opportunity to see the finer details of the proposed changes sooner rather than later.
“In fact, the tax content of the manifesto had much of the flavour of a Budget, so it is relatively easy to predict how these promises translate into Budget measures. The real question will be whether the Government, empowered by its significant parliamentary majority, chooses to supplement these manifesto commitments with new, bolder policies.
Sanger concluded, “Budget confirmation of the increase in allowances supporting investment – such as the increase in the rate of structures and buildings allowance – will be welcome. At the same time, the removal of the risk of the introduction of the ‘Inclusive Ownership Fund’ concept ends concerns that this policy had created for the use of UK as a headquarter location. Businesses can now start to engage with the Government ahead of the February Budget.”
The Accountant and International Accounting Bulletin are still awaiting a response from PwC