Hung parliament may be 'disaster' for UK, businesses warn

[LONDON] Business optimism in the UK economy plunged after Theresa May's Conservative Party lost its majority in Parliament, less than two weeks before talks start on exiting the European Union.

A survey of business leaders conducted over the weekend showed 57 per cent are pessimistic about the prospects of Britain's economy over the next year, according to the Institute of Directors. That's higher than when Britain voted in June last year to leave to the EU and 43 per cent of the executives were pessimistic, the business group 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," said Stephen Martin, director general of the IoD in an emailed statement.

Mrs May spent the weekend trying to negotiate an alliance with the Democratic Unionist Party after the election left her party short of the 326 seats needed for an overall majority. Mrs May called the snap election with a view to expand her previously slim majority and strengthen her hand for talks with the EU.

Of the 686 respondents to the IoD, 92 per cent said they were concerned about the make-up of the government and its impact on the UK economy. They were most worried about the UK's ability to secure a trade deal with the EU as it prepares to leave the bloc.

Britain has voted three times in three years: The June 8 general election, the 2016 referendum on Brexit and the 2015 general election. According to the survey, 59 per cent of business leaders don't want to see another election this year.

BLOOMBERG