I see that a recent study of growing businesses by the British Chambers of Commerce finds that two-thirds are concerned or very concerned about the impact of not having a majority party, while only one in seven respondents feel that it would be a good thing.
Let’s try and place the hung parliament discussion in context. The one thing that medium enterprises crave from their politicians is a stable economy so that business decisions within the firm are not constantly upset by changes without one. But it is not just a stable economy that they need. Medium businesses also need top-flight transport and communications infrastructure, access to finance, and a well-educated workforce.
So ask yourself this question? Will a hung parliament actually deliver any of these hopes? Or will it stand in the way of achieving these objectives?
It is reasonable to expect the main political parties to be different from each other, and given the opportunity to exercise their policies, the UK could look very different in a Labour regime of Big Government, compared to a Tory government of Small Government / Big Society, or even Nick Clegg’s Open Government.
But reality is likely to be very different. While each of them could lead Britain into completely different economic territory, it is going to take rather a long time. I suspect Britain’s appetite for a hung parliament may not last long enough to see change on that scale. In fact, a split leadership may not even last the course of a single parliament.
So we should really ask: Where are the changes that politicians can cause over a short period?
The bad news is that almost all the degrees of freedom open to politicians seeking a stable economy have been taken away. Inflation is poking upwards past the limits laid out for the Bank of England, fuelled in part by rising energy costs. House prices are back on the upswing, with today’s figures pointing to a 10% increase on average since last April. Typically, in such conditions, the interest rate would be a good candidate for a raise, but that could jeopardise the fragile and negligible growth that was witnessed over the last two quarters.
The UK put in 19% of its GDP into last year’s bail-out of the banks and, to a lesser extent, the car industry. This compares to 7% in the US, and less than 3% in both France and Germany. As a result, the UK’s stimulus package is around 0.2% of GDP, compared to the billions of dollars being poured into growth in countries such as Korea, China, and even the US, each of whom are putting over 30% of their respective GDPs into growth stimuli.
All of this means that we don’t have much room for manoeuvre, hung parliament or not. We will not have resources to plug gaps in infrastructure, business loans, jobs, or education. And we will have to compete in an international market where other countries may be doing better than us, faster than us.
Hung parliament or not, I do hope we end up with leaders who choose justice for the down-trodden, fairness and opportunity. For all the UK’s woes, we still live in one of the richest countries on the planet. Let’s not forget that.