What does the snap election mean for business sales?

Theresa May has today surprised many by announcing a surprise snap general election on 8 June.

The election is likely to be seen as a kind of referendum on Brexit and in particular the government’s preference for ‘hard Brexit’. Labour, the official opposition, is seen by many commentators as being weakened at present and in any case has so far largely supported Brexit. However, it is in an unusual position as many Labour constituencies voted in favour of Remain. The pro-European Liberal Democrats are a much smaller party but may benefit from tactical voting in some constituencies.

The likelihood is that the Conservative government will be returned with a strengthened majority and a stronger mandate to negotiate a ‘hard Brexit’ with the European Union. This may lead to short term volatility in the financial markets, with currency movements affecting business owners’ ability to forecast their costs.

The Director General of the CBI has just commented “With a snap general election now called, businesses will be looking to each political party to set out their plans to support economic stability and prosperity over the next parliament in a way that is fair and sustainable for communities across the UK. Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum.”

We expect that the general election will ultimately lead to ‘more of the same’ and that while it could cause some short-term challenges, overall a government with a strengthened mandate would bring more certainty to the markets. This is likely to be positive for both business sellers and acquirers.

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