With the results of the election now (mostly) in, it has become clear that although the Conservatives are on course to be the largest party, they will not have a majority in Parliament: they will fall short of the 326 required for a majority. We have yet to see what will happen next, although it looks likely that Theresa May will seek to strike a deal with Northern Ireland's pro-Brexit DUP. It is not clear yet whether a formal coalition is envisaged or a more informal minority government arrangement.
A minority government would not be unprecedented in the UK (across Europe they are more commonplace). However, the Conservative party may now struggle to get all of its manifesto policies on the Statute Book and it may need to look at amending or dropping some of its plans in order to form a government.
As a reminder, some of the key points contained in the Conservative manifesto which will affect businesses include:
Brexit – a plan to enter into negotiations to leave the EU but with the belief that no deal is better than a bad deal. The Great Repeal Bill is planned which will convert EU law into UK law, once in UK law provisions can then be amended or repealed by parliament;
Tax – a planned reduction of corporation tax to 17% by 2020;
Business transactions and governance – a planned update to the rules governing mergers and takeover in an attempt to exercise greater scrutiny over takeover bids, in particular those transactions involving overseas investment. Rules will also be changed to ensure employee interests are represented a board level of publicly listed companies;
Energy – an independent review will be commissioned into the cost of energy which will make recommendations as to how to ensure UK energy costs are as low as possible. There will also be the development of the extraction of shale gas via changes in planning law for shale applications and changes so that a greater percentage of tax revenues from shale gas will directly benefit communities hosting extraction sites;
Transport – a planned £40 billion investment into transport improvements across the UK, including the road networks, HS2, Northern Powerhouse Rail and the expansion of Heathrow airport;
Digital infrastructure – increased access to high speed broadband across the country and an extension of mobile phone coverage, including on all main line trains which will also enjoy guaranteed wifi services. Increased spectrum is planned to be released from the public sector to the private sector; and
Data privacy – a new data protection law and increased rights for individuals to require social media platforms to delete information held about them are envisaged. An expert Data Use and Ethics Commission will be instituted to advise regulators and parliament on the nature of data use and how to prevent its abuse.
Regardless of what happens over the next few days, there is likely to be a prolonged period of political instability. This potentially offers opportunities for businesses and industries to seek to influence policies in a number of important areas. The election result has made clear that nothing is a foregone conclusion. The UK is more likely to stay together (following the SNP's decline in Scotland), and it is more likely than not that there will be another UK general election in the autumn.