Now that the dust is starting to settle after the recent “shock” election result what does it all mean for the economy as a whole and retailers in particular? At Dymond Shop Fittings we specialise in creating bespoke metal display solutions for retailers, retail designers and shopfitters so the question is a very important one for us and our customers.
The retail industry’s initial reaction was a sense of disappointment. A strong conservative majority, regardless of your personal political views, was considered more likely to give us the “strong and stable” government promised by Mrs May.
However, there some positives and we can tentatively say that there are some reasons to be cheerful.
We’re less likely to get a hard Brexit
Before the election Mrs May seemed set on a hard Brexit. Her preferred outcome appeared to be a clean break with the EU and the single market followed by a relationship with Europe based, initially, at least, on World Trade Organization rules. In her words “no deal is better than a bad deal”.
The business community and those in the city had severe misgivings about this approach. They felt that no deal could be more harmful to the economy and their companies than a bad deal. They also worried that without access to skilled workers from abroad many sectors of the economy would stall, to say nothing of the likely crisis in the NHS if the supply of qualified doctors and nurses was restricted.
The election result, one could argue, was a vote for soft Brexit. That, at any rate, is what we are now more likely to get – a future where the UK retains some form of membership of the European Union single market in return for a degree of free movement of people. It is now unlikely that a hard Brexit, and its associated large-scale legislation, can be successfully piloted through the new parliament, either in the Commons or particularly in the Lords.
Most business people prefer the soft option because it is likely to be less disruptive and will help us continue “business as usual”. By making this outcome much more likely the election result has done British business a favour.
We’re more likely to get a softening of austerity
The election result has also dealt a big political blow to the “austerity” path that the Conservatives have pursued since 2010. The election result can be seen as an anti-austerity vote. It’s certainly true that many Conservative MRS, fearful of an early election and the very real threat of defeat, would prefer a marked relaxation of the austerity agenda.
What’s more, if the government had persisted with its hard Brexit plan this would have increased the budget deficit. A softer Brexit relieves some of this pressure and gives Phillip Hammond, the chancellor, more room to relax the austerity policies.
In recent interviews Mr Hammond seems to be leaning towards a softer Brexit, though only in the form of a lengthy transition deal towards the ultimate goal of taking the UK out of the single market and, apparently, the customs union. This would prevent the “cliff edge” of no deal with the EU and give the chancellor a better chance of being able to relax austerity policies in coming budgets.
So, we may well see increased government borrowing and spending, which could boost the economy and relieve pressure on consumers feeling the pinch as wages fail to keep pace with inflation. This in turn would be great news for retailers as it would almost certainly encourage greater consumer spending.
Seize the opportunities
Although the retail industry as a whole seems gloomy about the fact we now have a hung parliament we see a silver lining to the cloud. The prospect of a softer Brexit and an earlier end to austerity will both be beneficial for the retail industry.
We believe that those who “Keep calm and carry on” can do very well in an environment where the media and others are talking up panic. Now is actually a good time for concentrating on the things you can influence, and ignore those you can’t. Consumers will still shop in stores that provide an attractive retail environment where goods are well displayed. If you’d like to discuss the best ways to up your game with enhanced retail display solutions then we’d love to share our design and fabricating experience with you.