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The Upcoming UK General Election: Navigating Uncertainty and Its Impact on the Economy and Job Market

UK General Election and Its Impact on the Economy and Job Market
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Managing Director

As the United Kingdom braces itself for the upcoming general election, the air is, once more, thick with uncertainty. This political event is pivotal in shaping the nation’s future and brings with it a whirlwind of potential changes. The stakes are high, and the ripple effects on the UK economy and job market are profound.

Elections inherently bring a degree of unpredictability, but the current political climate in the UK is particularly volatile. Issues such as Brexit, public sector funding, healthcare, and climate change dominate, each carrying significant economic implications. Businesses, investors, and consumers are all trying to anticipate the outcome and its potential impact on the UK economy. In this article, we examine key areas the uncertainty impacts, the policies put forward by the Conservatives and Labour, and how we can navigate the next few weeks. 

The uncertainty surrounding the election impacts both domestic and international perceptions of the UK economy. Key areas of concern include domestic and foreign investment where investors are likely to adopt a 'wait-and-see' approach, postponing decisions until the political landscape is clearer. Typically, an election announcement has a depressing effect on the pound, however, we’re seeing it holding steady against both the dollar and the euro. Analysts suggest that the impact of the election on the pound is relatively muted compared to past political seismic events like Brexit or the controversial budget under former Prime Minister Liz Truss. Instead, the pound's movements are being influenced by monetary policy expectations and economic indicators rather than political developments​ ( ) (Al Arabiya English ).

The general sentiment in the financial markets is that the Bank of England is unlikely to make significant policy changes, such as interest rate cuts, until after the election. There has not been a direct and immediate impact on the actual rate of inflation currently, as these are influenced by a variety of factors, including supply and demand dynamics, global commodity prices, and monetary policy, which typically react over longer periods to changes in the economic and political landscape. Instead, the election's impact on the pound is expected to be more indirect, influencing long-term economic stability and investor confidence rather than causing immediate volatility​ (Al Arabiya English ).

Brexit remains a central issue even years after the referendum. The way forward—whether it be through renegotiations of trade deals or further alignment with EU standards—could significantly alter the UK’s economic landscape. Businesses involved in import and export are especially sensitive to these changes, as tariffs and regulations could drastically affect their operations. From a staffing point of view, general election announcements usually trigger a freeze on hiring or even a raft of redundancies as companies attempt to maintain financial stability in the face of potential policy shifts that could impact their costs and revenues. For job seekers, this means fewer opportunities and increased competition for available positions. However, certain sectors continue to struggle to recruit suitable staff due to Brexit, and this has had a range of impacts on UK businesses, including increasing costs, disrupting operations, and forcing strategic shifts towards automation and new recruitment strategies. These challenges underscore the need for adaptive measures to address the evolving labour market landscape post-Brexit.

Sunak's plans versus Starmer's plans

Unsurprisingly, Labour and the Conservatives have different stances on fiscal policies and public spending, both of which will have significant implications for businesses and the job market. Policies promoting increased government expenditure on infrastructure, healthcare, and education could stimulate growth but may also lead to higher taxes. Conversely, austerity measures aimed at reducing the national debt could slow down economic recovery but stabilise financial markets. The economic plans of Keir Starmer and Rishi Sunak present voters with a choice between two distinct paths for the UK’s future.

Sunak’s vision is characterised by fiscal conservatism, low taxes, and strategic investments in innovation. It aims to foster a competitive business environment and long-term stability. During the pandemic, he proved his ability to think creatively about fiscal policy and economic stimulation. He has already announced measures to support businesses, particularly small and medium-sized enterprises (SMEs), through tax cuts, grants, and access to financing. This support could help businesses retain employees and potentially create new job opportunities as economic conditions improve. Similarly, his plans for investment in projects such as housing, transportation, and digital infrastructure could lead to job creation in construction, engineering and associated fields. The current emphasis on investing in skills training and education to upskill and reskill workers for emerging industries will be essential to support these plans. Interestingly, whilst the Conservative Party has shown support for green initiatives, such as the transition to renewable energy and achieving net-zero emissions, the emphasis on these policies in Sunak's plans is less defined.

In contrast, Starmer’s approach focuses on substantial public spending, progressive tax reforms, and a comprehensive green agenda. A cornerstone of their policy is increased funding for public services, such as the National Health Service (NHS), education, and social care, which would likely lead to job growth in these sectors. They’ve also proposed a “Green New Deal” that would significantly boost employment in green industries, fostering job creation in sectors such as wind and solar power, electric vehicle manufacturing, and home insulation. However, it will also require significant upskilling of the existing workforce and, potentially, reskilling workers from traditional industries, placing a significant burden on businesses. Whilst Starmer’s proposal to strengthen workers' rights, including enhancing job security and increasing the minimum wage, will potentially find favour with voters, it is likely to send a ripple of alarm amongst businesses facing increased labour costs. This is especially true for manufacturing and other industries operating on increasingly tight margins owing to increasing operational costs. Coupled with a more conservative approach to support for SMEs than that proposed by Sunak and Starmer’s plans may lead to reduced hiring or increased prices if companies pass on the costs to consumers.

Thus, the election outcome will significantly influence the direction of the UK economy and its capacity to address current challenges and future opportunities. At the start of the year, the prediction was for the general election to be held towards the end of the year, and so it is with some relief that whichever way the country votes, the uncertainty will be over within a few short weeks. As we move closer to the general election, the air of uncertainty is likely to intensify. The outcome will undoubtedly shape the economic and employment landscape in significant ways. In the meantime, while uncertainty can be daunting, it also presents opportunities for innovation and adaptation. By staying informed and proactive, businesses can navigate this period with greater confidence and resilience

ASL Recruitment was established in 1999 and has served Hastings and the surrounding area ever since, placing temporary and permanent roles across various sectors, including Industrial and Manufacturing, Legal, Finance, Marketing, Technology and Office Support, from junior to board level. Our co-founder and Managing Director, Jason Perry , is an HR specialist and a Chartered Fellow of the Chartered Institute of Personnel and Development.