UK 2015 Elections Biggest Risk to Corporations

Political uncertainty ahead of May’s general election and the weakening eurozone economy are hitting confidence across British businesses.

Two surveys on Monday show that firms began the new year fretting about domestic political upheaval and the possibility that geopolitical tensions could escalate in 2015.

The general election is seen as the biggest threat to business this year, according to Deloitte’s latest quarterly poll of finance chiefs at Britain’s biggest companies. The prospect of a hung parliament, in which smaller parties hold the balance of power, is making firms more wary.

“The decline in support for the three main parties, and the rise in support for others, means the risk of political instability and the possibility of more radical policy changes is greater than before,” said Ian Stewart, Deloitte’s chief economist.

“In the past, CFOs had been more concerned with increased financial and economic uncertainty, but they’re now latching onto the more uncertain domestic political landscape.”

Analysts say the election is the hardest to predict in generations, given the surge in support for Ukip, the Scottish National party and the Greens. A hung parliament is possible, raising the prospect of a second election before the end of the year.

Chief finance officers are also more concerned than three months ago about the weak eurozone economy, which is teetering on the brink of deflation, and the possibility of Britain leaving the EU.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza