Election Result: BRC, GlobalData & KPMG Commentary

Following the news that the Conservative Party has secured a majority in the 2019 UK general election;

Patrick O’Brien, UK Retail Research Director at GlobalData, offers his view on what this means for the retail sector:

“Whatever your politics, the result is at least decisive, and offers retailers some short-term relief after what has been a slow start to the Christmas shopping season so far. With two weekends left before Christmas, retailers may see some extra spend unlocked, now that the immediate path to Brexit appears to have cleared. Retailers will also be boosted by the strengthening pound, now at a three-year high against the dollar.

“Retailers may also enjoy a good start to 2020, as the confirmation of Brexit at the end of January brings further clarity at least, whichever side of the remain/leave divide you are on. Any boost may be short-lived though, as negotiations on a trade deal with the EU begin; we expect brinkmanship to resurface especially as the end-of-2020 deadline for negotiations gets closer.

“Retailers also need to put further pressure on the Conservative government to make good on its manifesto pledge to have a fundamental review of business rates. Such reviews have been promised before, but only resulted in tweaks which have done little to relieve the stress that retail chains are under. We will see if this government has the appetite for radical changes to the system, but with the implementation of Brexit ahead, and the difficulty of pushing any of the burden lifted from physical retailers to others (whether it be consumers, online retailers or other businesses), progress on the issue is likely to be slow.”

KPMG UK

Commenting on the impact following the election outcome, James Stewart, Vice Chairman and Head of Brexit, KPMG UK says:

“Business will welcome the clarity of the election outcome.

“However in terms of the Brexit deal, the attention will be on the final exit deal in 12 months rather than the transition deal at the end of January.

“The Government’s two priorities for the next 12 months should be securing a good Brexit deal and getting the UK back on the path to growth – for example, investment in infrastructure and upskilling the UK workforce.

“Businesses and people will also be hoping for an inclusive government that addresses the divisions in society and achieves a better future across the UK.”

Yael Selfin, Chief Economist at KPMG UK, added:

“Reigniting investment spending and accelerating growth will be key for the new government but as the cloud of uncertainty around an EU deal is likely to remain throughout next year, public spending will need to do the heavy lifting.

“The new government must also turn its attention to some of the longer standing challenges facing the UK, such as poor productivity and declining regional opportunities, to help secure a better long term future, while addressing the challenges and opportunities presented by new technology and climate change.

“Although there is a broad consensus that a measured increase in public spending is right for the UK, limited capacity, both within government as it focuses on completing a deal, and in the labour market, call into question the extent of a boost it will bring next year. It could now be time to accelerate devolution and reconsider UK future migration policy.”

British Retail Consortium

Helen Dickinson OBE, chief executive of the British Retail Consortium (BRC), comments: “We look forward to working with the new Government on the many issues facing retailers. The Prime Minister must now fulfil his manifesto pledge and urgently begin a fundamental review into the broken business rates system to relieve the burden on retail businesses and create a system fit for the 21st century.

“Retailers employ three million people across the UK, making the industry the UK’s largest private sector employer. It is therefore important that the Apprenticeship Levy is made more flexible to enable the industry to use funds for any form of accredited training to suit its skills needs and create a workforce fit for the future. Equally, retailers need to see action from Government to tackle retail violence. Every day, 115 people are attacked at work - no-one should go to work in fear.

“It is also vital over the coming days and weeks that the Government commits to bringing clarity on the UK’s future relationship with the EU and pursues a fair deal for consumers that maintains tariff-free, frictionless trade with the EU.

“With retail conditions the toughest they have been for a decade, the Prime Minister must act to support the successful reinvention of retail locations and local communities. We look forward to working with ministers on a strategy to strengthen the retail industry during this period of unprecedented change.”

We will update this story with additional commentary as it is made available.

Source : Global Data, KPMG UK and BRC

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