Out Of The (Ballot) Box Thinking

31st May 24

Blog Out of the ballot box Carousel v3 100

There is one sector of society that has reason to be enormously grateful toward Rishi Sunak and his decision to spring a surprise election on the country. It is the travel industry. In ordinary times, June is a rather soft month for those who aspire to sell us foreign holidays. It falls between May, with its two bank holidays, and July when summer really starts to kick in and schools shut for weeks on end. Relatively few people, therefore, take a major sojourn in the sixth month of the year customarily. Hotels are empty. Flights have seats to spare. The sun loungers have no towels draped on them.

It may well be different now that the Prime Minister has released the politicians upon the public. Business is probably booming at travel agents throughout the United Kingdom. The incentive to head elsewhere could hardly be more enticing. The poor citizens who remain are destined to have their news broadcasts dominated by predictable campaign stunts, promises with a plasticine quality to them and slogans designed to test the intelligence of the typical toddler. At least if the hustings had taken place in October or November as had been almost universally anticipated, the days would have been shorter. A July 4th ballot means that canvassers could be knocking on doors at 9pm or later.

It will be the CFO who has to deal with enquiries as to whether or not the future of the business is about to be decided by the seeming lottery that is a British general election.

Will any of this activity, the set-piece speeches, the manifestos, the leaflets pushed through letter boxes, the televised “debates” and the trading of political insults actually make much difference? Will the votes when cast change character because of their unexpectedly early timing rather than they would have been later on in the year? Will this prove an unfortunate case of premature election? We will never know. Most people will not be that bothered one way or the other. The bad news is that we have to hold an election when the sun should be shining. The good news is that it will be over.

What should the poor long-suffering CFO do in these disagreeable circumstances? Join the exodus to explore the Albanian Riviera with most of the rest of the firm or hold the fort to offer reassurance? It will probably be the later option because the CEO will have worked out their exit strategy already. Not for the first time, it will be the CFO who has to deal with enquiries as to whether or not the future of the business is about to be decided by the seeming lottery that is a British general election.

The CFO then will have to convince those around them that it will be all right in the end. The acts of buying and selling are not placed on hold while it is determined which of Mr Sunak and Sir Keir is destined to be the occupant of 10 Downing Street when the new Parliament is established. And there are serious words of comfort which those in corporate leadership should be contemplating.

The Prime Minister and the Leader of the Opposition may be vulnerable to the charge of being a tad dull, but would one want the excitement that Boris Johnson v Jeremy Corbyn offered in spades?

The first is that while our elections are not exactly enjoyable events, they could be a lot worse. Pity the poor Americans for example. Their campaign has already been running for months and months and has the better part of six months still until it ends (on the optimistic notion that it will end after Tuesday November 5th and not be disputed and fought out again in a courtroom). We are also not cursed by political commercials on every television station imaginable as literally billions of dollars is spent mostly on messages attacking the other contender. Nor, whatever one might think about Rishi Sunak and Sir Keir Starmer, has it been seriously suggested that one of them is essentially senile while the one is a warped sort of psychopath with an ego the size of the Empire State Building. By the standards of the USA, our election contest will be relatively short, cheap and almost civilised.

The second factor to remember is that this time – despite all of the noise – the two main political parties are not really that far apart. The disagreement is less about the ends than the means and even on that score the manifesto commitments will not be chalk and cheese either. It is a far cry from the campaigns in 2017 and, especially, 2019, when Jeremy Corbyn appeared to be itching to nationalise everything that moved and base his foreign policy on unabashed anti-Americanism. The Prime Minister and the Leader of the Opposition may be vulnerable to the charge of being a tad dull, but would one want the excitement that Boris Johnson v Jeremy Corbyn offered in spades? With a few exceptions (and, alas, the taxation of private equity may be one of them alongside school fees), there will not be many businesses or sections of the economy which will have to rip up their existing plans and consider a fundamental change of approach because of what the election finally delivers.

The third element to remember is that if, as seems very plausible after the opinion polls of the past two years or so, power is about to be transferred and Labour replace the Conservatives in office after a fourteen-year stretch in the Westminster and Whitehall wilderness, then that will almost certainly occur swiftly, smoothly and without incident. Ours is an unusual democracy in that it has the removal van as an unofficial symbol. At precious little notice, the most powerful person in the land discovers that they are a mere mortal once again as their possessions are packed away by Pickfords. This is a salutary reminder as to where UK sovereignty ultimately lies, with the public and not the politicians.

So, CFOs (and the rest of us) should not complain too much about a few weeks of inconvenience. To protest that an election involves “uncertainty” is to ignore the reality that uncertainty has been the norm even where the ruling party has a substantial majority in the House of Commons. This election may herald an extended era of comparative stability even if not every aspect of it is wholly welcome.

And let us face it we are all entitled to some stability (not least those in charge of companies). In the past 15 years we have endured a sharp recession, an election that produced a peacetime coalition administration, a referendum on the electoral system (remember that?), a referendum on whether Scotland should remain in the United Kingdom, an election that provided a small majority for the Conservatives, a referendum on whether Britain should remain in or leave the European Union, a snap election that led to a minority Conservative Government, four failed attempts at legislating for Brexit, an election that triggered a large Conservative majority, a global pandemic, the Russian invasion of Ukraine, the return of inflation to levels not seen for 30 years, Liz Truss for less than 50 days, and now an election campaign that is occurring five or six months before the sell-by date. All of this leaves aside other matters such as the status of Huw Edwards, Philip Schofield and Russell Brand. Has not the nation had more than enough earthquakes to put up with in the course of fifteen years?

If there were a Peace and Quiet Party standing for election on July 4th, most CFOs would vote for it. If you are planning to escape abroad in June, do not return in a spirit of dread and of doom. If staying here then turn off the television, close the newspapers and focus on the EquityFD website instead.