Why business no longer trusts the Tories


The Conservative party used to be the party of business. This was obvious.  It preached low taxes and minimal regulation (perhaps too low and too minimal for some), and it was also the fiscally responsible party reluctant to let the government spend more than its income, and intent on providing an economic environment where industries could make decent profits by providing goods or services to UK citizens, or by exporting them abroad.

How times have changed!

 

 

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The government’s own performance has seen some spectacularly wasteful examples recently. £50m wasted on no-deal Brexit ferry contracts (including a company with no ferries). Minting Brexit 50p pieces and then melting them down again, at a cost to the taxpayer the treasury refuses to reveal.

 

But government incompetence is nothing new. What is novel and disturbing is that the current Tory leadership are unable to understand what businesses need. 

 

Any business that sells goods abroad needs to know not just what the new import duties are going to be but also what system for regulatory approval will be in place. Any business that imports from abroad needs to know the same.  This Conservative government does not seem to understand this, relying on populist rhetoric about getting Brexit done and implausible assertions that everything will be fine. 

Farmers are particularly worried, and with good reason. When the EU imposes import tariffs after Brexit they will be priced out of their main export market, while the home market  will be flooded by US imports which will cheaper due to lower hygiene and animal welfare standards.  ("Chlorine washed" chicken is not the problem: it's the need to wash chicken in chlorine to kill the harmful bacteria that come from intensive rearing that's the problem.) We have high animal welfare standards here, thanks to the EU. Farmers want to keep them. But they can't compete on price with US factory farming.

 

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Even businesses that do little or no trade with Europe are being hit. Mr Kipling, the (exceedingly good) cake maker, is upset because if a large fraction of the UK lorry fleet is going be tied up at Dover for customs checks, they will not be available to distribute cakes from  bakery to retailer. 

 

 

 

It’s not just Brexit-related. The sudden decision not to reduce corporation tax has hit businesses not only directly but because the promised rate had been factored into future financial planning.  How can you plan strategy and investment when the rules change on the whim of the leader?

 

 

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An article in the Financial Times, written in response to Boris Johnson’s “Fuck Business” remark, laments that  commerce has lost out to nationalism in the Conservatives - and that was written when he was only foreign secretary.  Today’s populist party, run  by journalists and hedge-fund managers,  is being disowned by the old school Conservatives like Michael Heseltine and John Major, who knew how business worked and what business needed. The image of the Conservatives as the business friendly party is being comprehensively broken before our eyes.

More messages from business leaderss that Jonathan has received, on Brexit in particular, can be found here.


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