Businesses give Boris Johnson’s election victory cautious welcome

Businesses in the North West have given Boris Johnson’s election victory a cautious welcome.

The Labour Party lost a string of seats in the North West including Warrington South, Bury South, Bury North, Heywood and Middleton, Bolton North East and Leigh.

In Greater Manchester the biggest shock of the night was Leigh, which was won by Tory James Grundy – overturning a majority of nearly 10,000.

Tory gains from Labour strongholds were replicated across Yorkshire, the Midlands and North Wales.

The Conservative Party is expected to have a majority of around 80 seats giving the Government a mandate to leave Europe in the New Year.

The new government has also announced there will be a budget in February.

The pound had risen sharply rising nearly 3% against the dollar to an 18-month high of $1.35 – up from $1.20 in August. The pound reached its highest level against the euro since the 2016 referendum.

Just before 8am, with a handful of seats still to declare, the Conservatives had won 364 seats, Labour 203, the SNP 48, Liberal Democrats 11 and 22 others.

Some big names lost their seats during the course of the night, they included Liberal leader Jo Swinson, Chuka Umunna and Zac Goldsmith.

Jeremy Corbyn has also confirmed he will not lead the Labour Party in the next General Election campaign.

Russ Mould, investment director at Manchester stockbroker AJ Bell said:   “The result removes the threat of Labour trying to renationalise many sectors, explaining why shares in Royal Mail jumped 8% to 250.4p, transport companies rallied – Go-Ahead up 7% to 135p and Stagecoach up 14% to 150.5p – and utility stocks were back in fashion, including Centrica up 14% to 92.04p.

“The fact that there also won’t be a hung parliament has given support to equities. The market now has more confidence that Johnson should be able to pass a Brexit deal and for the UK to formally leave the EU at the end of January 2020.

“All these factors helped the FTSE 250 to trade 4.9% higher at 21,839 on Friday, triggering the starting gun for investors to start looking at UK equities again.

“The market is now digesting the prospect of a stronger UK economy as a result of the Conservative victory which explains why shares in banks, housebuilders, leisure companies and retailers jumped following the General Election news.

“There still remains much uncertainty with regards to Brexit and so today’s market fanfare may not necessarily be setting the tone for how all of 2020 will play out.

“Markets hate uncertainty and ultimately Brexit will become centre-stage again. Investors have been served a distraction in the form of the General Election in recent weeks but the focus will now have to shift back to the structure of any trade deal and what could happen to the UK at the end of the 2020 transition period.

“Short-term the Conservatives have discussed increased spending which could give the economy a boost. Longer-term still remains uncertain and so markets are not going to keep opening bottles of champagne to toast a new dawn for the country.”

Polling expert Professor Sir John Curtice said: “There is a striking contrast between Labour’s defeat this time and the one in 1983 that perhaps might lead one to think this is the more serious defeat.

“Back in 1983, when by the way Labour got a lower share of the vote than they got this time, what enabled Labour in 1983 to defend itself against what was no more 28% share of the vote was that it held on to its traditional areas of strength.

“The striking thing about this election is the way in which it performed most-worse in the north of England, in the Midlands, in working-class seats.”

Simon Brownbill, partner and head of practice development at accounting and business advisory firm HURST: “Over time, most of our clients were accepting of Brexit, but wanted our departure to be properly managed with a withdrawal agreement in place.

“There was frustration that parliament had failed to get behind previous deals and, in that sense, many of our clients, despite not necessarily being natural Conservative supporters, were rooting for an outright Conservative victory.

“Coupled with this, many of our clients were deeply fearful of Labour’s economic strategy and the perceived damage this would do to the prospects of businesses and their employees.
All in all, this is a positive outcome for business given the current state of UK politics.”

Henri Murison, director of the Northern Powerhouse Partnership said: “The building blocks for addressing the North – South divide are clear; investment in education and skills, improved transport infrastructure, more devolution and a rebalancing of increased spending on research and development.

“The new government needs to urgently address these critical areas, in a matter of weeks not months, if they want to deliver a Northern Powerhouse for the 15 million people who live and work here and complete the establishment of a northern growth body led by and for the North to take Trade and Investment our from Whitehall control as well as wider areas.

“The case building both HS2, starting from the North, and Northern Powerhouse Rail in full, and overhaul the region’s wider local transport network through devolved funding and powers has never been stronger. The time for being equivocal on this issue has run out.

“MPs from all parties in the North have backed the Connecting Britain campaign of business and civic leaders. The new government must now unequivocally do the same and publish the full recommendations of the Oakervee Review this month which we know mirror those of the widely welcomed Northern Powerhouse Independent Review into HS2.

“This election has seen the North come in and out of focus, however, the Prime Minister must now deliver on his election campaign promises and do what no government has achieved since the first Industrial Revolution – make a step change in progress towards rebalancing the UK economy, capturing a trillion-pound economic gain for the country over the coming decades.”

Neil Wilson, chief market analyst at Markets.com, said: “For the markets and for business, this is the perfect result – a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick Budget to inject the economy with some added impetus,” he said.

“The only doubts are around the next phase of Brexit – the future relationship – but with a large majority, the government will be in a better place to negotiate.”

Guy Foster, head of research at wealth manager Brewin Dolphin, said: “This should be positive for both business and consumer confidence, at least in the short term, with a gradual acceleration in GDP growth and confidence.

“However, a lot can change over the coming months as the finer detail of the UK’s future trade relationship with the EU is negotiated.

“This is still, after all, just the beginning of the exit process. Even with the passing of the withdrawal agreement, the UK could still leave the EU without a deal at the end of 2020 if trade negotiations don’t proceed successfully.”