Business leaders on Thursday warned that the resignation of Liz Truss spelt further uncertainty for UK companies already facing worsening economic conditions.
Shevaun Haviland, director-general of the British Chambers of Commerce, said the next prime minister needed to “return both political and economic stability”.
“The new administration must immediately set out how they plan to deal with soaring energy bills, labour shortages, spiralling inflation and interest rates,” she said. “Flip-flopping on policies has led to low consumer and business confidence.”
Companies face a nervous wait to find out who will replace Truss. Many business leaders wanted to see former chancellor Rishi Sunak succeed Boris Johnson, having worked with him closely on business support packages during the coronavirus pandemic.
Sunak was seen as the safest pair of hands among the leadership contenders, owing to the likelihood of the new administration keeping policies, including tax incentives for investment, that had been popular with some business groups.
Company leaders initially praised Truss’s vow of a pro-business and pro-growth premiership, overlooking warnings about the effects of her low-tax agenda on the economy amid eagerness to reset relations with Downing Street.
But business confidence has slumped since the summer as companies have faced new threats from the sharp rise in inflation, and in particular from spiralling energy bills and rising interest rates.
The government’s September “mini” Budget — much of which has since been reversed by new chancellor Jeremy Hunt — directly led to a fall in confidence and an increase in costs, according to many executives.
Bosses on Thursday said UK businesses were deferring decisions over investment because of the political uncertainty, which has also eroded confidence among overseas investors.
Tony Danker, director-general of the CBI, Britain’s largest business group, said recent political tumult had “undermined the confidence of people, businesses, markets and global investors in Britain. That must now come to an end if we are to avoid yet more harm to households and firms”.
He added that Truss’s successor needed to act urgently to restore confidence by “deliver[ing] a credible fiscal plan for the medium term as soon as possible, and a plan for the long-term growth of our economy”.
Richard Burge, head of the London Chamber of Commerce and Industry, said it was “shocking that the government has allowed chaos to have free rein in recent weeks, damaging our economy and jeopardising our standing on the world stage”.
He said Truss’s resignation would “not bring instant relief” or “magically inspire confidence among the many businesses that are trading in the worst economic climate in decades”.
Confidence among British small business owners has dropped to its lowest level since the height of the coronavirus pandemic as they face rising costs and falling revenues, according to the Federation of Small Businesses.
FSB national chair Martin McTague said companies were “crying out for an end to the political turmoil and a focus on remedying the economy, supporting small firms through the hard winter ahead”.
Haviland of the BCC said the government must look again at the energy support package for businesses, due to end next April, as well as addressing the lack of skilled labour and setting out a strategy to boost exports.
“People run businesses and businesses rely on people. The new administration must grasp that the cost of living and cost of doing business crises are two sides of the same coin.”