UK business bemoans more upheaval after Truss’ departure
UK business is facing up to the reality that Liz Truss’ departure after only 45 days as prime minister complicates an already tricky environment. High inflation, rising borrowing costs and persistent labour shortages have driven confidence among small businesses to lows only previously seen during Covid-19 lockdowns.
UK Hospitality, the Federation of Small Businesses and other groups representing companies are calling for a swift return to stability and continuity in policy-making.
“The politics of recent weeks have undermined the confidence of people, businesses, markets and global investors in Britain,” said Tony Danker, director general at the Confederation of British Industries. “That must now come to an end if we are to avoid yet more harm to households and firms.”
Brian Duffy, the chief executive officer of Watches of Switzerland, the biggest dealer of Rolex watches in the UK, told Bloomberg he’s “desperate for stability and direction.”
At the top of the list of concerns for business is the energy support package, a policy backed by Truss. The programme, set to run through April, was seen as a lifeline over the winter for firms ranging from fertiliser plants to hotels and launderettes.
Yet even before Truss stepped down, companies were calling for more clarity over what would happen when the aid package ends. Now some are asking if it will go into effect at all if the premiership change brings a new chancellor with new economic priorities.
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“This is a huge concern for businesses like ours,” said Andrew Jenkins, whose Orchard Lodge bed and breakfast in Scarborough, England is seeing electricity bills double from last year. “It could finish a very significant number of businesses off.”
Yorkin Associates, which manufactures plastic access chambers for utility companies from recycled materials, was forced to splurge on extra equipment to cushion against a potential blow from higher energy bills because of doubts over the aid.
Owner Robin Brown recently replaced one of his plastic injection moulding machines with a more efficient second-hand model which cost £12,000 (S$19,064) and took two weeks to set up. “That’s money I’d rather have in the bank,” he said. When the energy support ends, his annual electricity bills could go from £36,000 to £108,000.
Energy costs are an especially pressing issue for agri-businesses, not just in winter. Drying grain, for example, requires energy in warmer months, while fertiliser makers and feed mill operators use energy throughout the year.
The Agriculture Industries Confederation sent a letter this week to the Department for Business, Energy, and Industrial Strategy demanding further clarifications, according to a document seen by Bloomberg News.
“Business certainty and planning is at a critical point in our nation’s food security,” the trade group’s CEO, Robert Sheasby, wrote to Business Minister Jacob Rees-Mogg. With Truss gone and another government shakeup imminent, getting answers to those questions may take longer.
Across industries, the prolonged period of upheaval that began with the ouster of former Prime Minister Boris Johnson earlier in the year and reached a market-roiling peak under Truss has created a bewildering environment for firms weighing investment in their businesses or the UK at large.
“Let’s hope the process of choosing the next leader is done efficiently and we’ll have a more stable situation going forward,” said Duffy at Watches of Switzerland. “Some permanent damage has probably been done, or at least it will take some time to undo it.” BLOOMBERG
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