Hung parliament and economic uncertainty stall employer expansion plans

Employers are lacking in confidence following the general election and are refusing to move forward with expansion plans, a new poll has revealed.


Of 3,200 firms quizzed in a snap poll by the Federation of Small Businesses, more than half (54%) said they would not take on new staff or introduce new products and services, and 52% admitted they lacked confidence in the economy.


Firms are nervous following the outcome of last week’s election – where none of the parties received a majority to govern the country – which resulted in a hung parliament.


Only yesterday, Gordon Brown announced that he will resign as the Labour Party leader in September, and the political turmoil has left small businesses reeling.


Almost half of those polled (49%) are demanding another election in six months, while seven in 10 firms want the incoming government to reduce the Budget deficit, and 52% expect this to be achieved through cuts in public spending. Another 44% want to see the banking system reformed, and 38% want the government to steady the financial markets.


John Walker, national chairman of the Federation of Small Businesses, said: “These figures worryingly show that small firms have lost confidence in the economy following the outcome of the election just as the business community was beginning to recover from the downturn.


“At a time of economic uncertainty, small businesses really need a government – of whatever make up – to get on with the job and set out a plan for dealing with the deficit and returning the UK economy to growth.”


Last month, a British Chambers of Commerce study found 65% of 300 firms were “concerned” or “very concerned” about the potential for a hung parliament. Just 13% thought that the outcome would be a “good thing”.

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