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Having called a snap election to strengthen her mandate to negotiate Britain’s divorce from the EU, it seems as if Theresa May’s plan has backfired. As the results trickled in this morning, it became obvious that the prime minister had failed to secure a parliamentary majority. The vote has not only left the UK with a hung parliament but also with a startup community anxious about its future.
The Conservatives now have 13 fewer parliamentary seats, leaving the party with a total of 318 seats. Labour did better than expected, having won 32 additional seats and achieving 262 in total. Meanwhile, the Liberal Democrats gained three more seats, bringing its total to 12. The Scottish National Party only just clung on to power in Scotland and now have 35 seats after losing 19. Many eyes are on the Democratic Unionist Party (DUP), which has ten seats after gaining two. May has announced her intentions to form a coalition government with the DUP.
Unsurprisingly, news of the hung parliament has already elicited quite a few reactions from the business community, especially since the pound fell sharply by 2% against the dollar this morning. “This is a serious moment for the UK economy,” said Carolyn Fairbairn, director-general at the Confederation of British Industry. “The priority must be for politicians to get their house in order and form a functioning government, reassure the markets and protect our resilient economy.” She urged politicians to “act responsibly” and show “the world that the UK remains a safe destination for business.”
This sentiment was echoed by Russ Shaw, founder of Tech London Advocates and Global Tech Advocates, two organisations championing tech startups, who said that political and economic unrest could make it harder for new enterprises to attract investment and talent. “Tech entrepreneurs will be dismayed by an election result that only delivers further market uncertainty and doubt,” he said. “London has worked hard to establish a global reputation as a capital of tech innovation but our endless political turmoil threatens to undermine the best efforts of the private sector by chipping away at the confidence of investors, entrepreneurs and world-class talent.”
And given that May called the snap election in a bid to strengthen her hand in the Brexit negotiations, it’s hardly surprising that many SMEs are wondering how the results will affect the talks. Some, like Mike Cherry, national chairman of the Federation of Small Businesses, want discussions to be delayed until Britain is “led by a government and a prime minister that will be in place for the duration”. That won’t be an easy task, considering that many members of parliament on both sides of the aisle have already called for May’s resignation.
Others see the results as an opportunity to achieve a softer Brexit than the hard version championed by the prime minister. “This election has demonstrated that opinion is divided on the nature of the UK’s departure from the European Union and that a hard Brexit was not what the referendum mandated,” said Peter Tuvey, co-founder and managing partner of Fleximize, the alternative finance provider. “It’s now imperative that a new government is formed as a matter of urgency, so that we can enter balanced Brexit negotiations with some semblance of confidence.”
The election results follow a campaign that many entrepreneurs say failed to address their concerns. For instance, 66 entrepreneurs signed an open letter urging politicians to do more to help startups while Scottish SMEs said they felt ignored during the campaign. And it seems the startup community isn’t feeling optimistic that the results will make things better any time soon. “The uncertainty that will inevitably come from this election result is bad news for entrepreneurs and startups,” said Emily Mackay, CEO of Crowdsurfer, the data intelligence service for crowd finance. “[The] issues that would really make a difference to startups – better access to finance and support for entrepreneurs in the form of tax breaks and pre-school childcare – will take a back seat now.”
But it’s not all doom and gloom: some entrepreneurs are confident that startups can cope with what comes next. “Seen from a very Darwinian point of view, great things happen in difficult environments,” said Chris McCullough, CEO and co-founder at RotaGeek, the staff scheduling platform. “Startups and scaleups are built with an inherent agility and are best placed to leverage this opportunity for good.”
With the upcoming weeks and maybe months set to deliver spades of uncertainty, this resilience will definitely come in handy.
The story was updated on June 9 to reflect that the prime minister had announced her intentions of forming a government with the DUP.