As a result of prime minister Rishi Sunak’s cabinet reshuffle on Tuesday February 7, the current departments for Business, Energy and Industrial Strategy (BEIS) and Digital, Culture, Media and Sport (DCMS) have been carved into four new portfolios in an effort to reinvigorate Britain’s moribund economic growth.
As a result, there are lingering questions over how the move will impact the small businesses and side hustles in the UK – the businesses which make up almost all businesses in the UK. Richard Osborne, CEO of UK Business Forums (UKBF), the largest independently owned small business organisation in the UK with over 350,000 members, has highlighted the biggest talking points among UKBF’s community.
Is there enough time before the next general election?
The next general election is scheduled to be held no later than the start of 2025, meaning the new departmental structure will have a very limited amount of time to get up to speed. This immediately presents an alarming forecast for business owners and senior management of small-and medium-sized enterprises (SMEs), as the undertaking – which promises to be expensive, though no costs have been disclosed by the government – could just be scrapped by the Labour party in two years.
If Boris Johnson returns as prime minister, would he scrap it?
Boris Johnson returning as prime minister is already considered a ‘worst case scenario’ for many, and the possibility of him reversing Sunak’s dramatic cabinet reshuffle is a significant talking point. There has been a noticeable lack of economic bounce since Sunak took charge and if the Conservative party head into the next election looking ropey – as they do currently – then Johnson’s return is suddenly much more feasible.
Are these the best people for the job?
The pre-politics business dealings of powerbrokers is a contentious topic at the best of times, but spotlighted even more so during times of economic duress. Grant Shapps, appointed to head a new Department for Energy Security and Net Zero, had 19 of his businesses’ websites blacklisted by Google for violating rules on copyright infringement. Anointing politicians with backgrounds which are open to interpretation is hardly likely to inspire confidence and questions are swirling around Shapps, as well as others who’ve received bigger and better roles as a result of the reshuffle – such as Greg Hands and Michelle Donelan.
The FTSE fallout
FTSE has had a steady but very slow improvement under Sunak, and while slowed progress was unavoidable in the wake of Liz Truss’ disastrous resignation making the market wary, if the city was happier, the improvement would’ve been faster and sharper. In the week following the announcement on Tuesday February 7, FTSE rose from 7,864.71 to 7,982.58 on Tuesday February 14.
Despite concerns, the global reaction has been minimal
While there are causes for concern, there’s been very little in the way of global fallout from Sunak’s announcement. While Ford notably decided to cut 1,300 jobs from Britain since the announcement was made, it might be a stretch to suggest the two events are connected. Elsewhere, Heathrow Airport has announced that passenger numbers have finally returned to pre-pandemic levels – a possible sign of business confidence in the UK.
Richard Osborne, CEO of UK Business Forums commented:
“This particular piece of news is a surprising, bold change from Prime Minister Rishi Sunak. I wasn’t expecting such a sweeping change and considering the time left until the next general election, the new departmental structure isn’t going to have much – if any – time to get up to speed.
“As it stands, I’m feeling uneasy about this change. Ultimately, what our community of business owners and senior management of small-and medium-sized enterprises (SMEs) wants to know is what this means for the small businesses and side hustles in the UK? These businesses make up almost all businesses in the UK.”