Originally published by Proxima, Jonathan Cooper-Bagnall & Guy Strafford writes...
It’s election time. All over the place, actually. General election fever/exhaustion (delete as applicable) is dominating headlines in the UK. And with Hilary Clinton, Marco Rubio and Rand Paul (among others) declaring their 2016 presidential ambitions in the US; and Le Pen family squabbles in the run-up to France’s regional polls, democracy is headline news all over the world.
(For the record, Turkey, Denmark, Spain and the UK are having general elections this year; there will be presidential votes in Croatia, Greece, Italy and Poland… and that’s just Europe.)
All this campaigning has two interesting effects on business leaders. First, we all start to wonder what effect a new government will have. And second, as we weigh up our verdict on the current crew, it makes us start to think about just how well (or how badly) the economy is going.
In the UK, at least, the first question is incredibly tricky. It seems almost certain we’ll have some kind of minority government. But the make-up of any coalition throws in some real wild-card factors for the next five years. And one of the biggest issues will be the extent to which the state loosens its grip on austerity; or decides to focus on deficit reduction, possibly at the cost of jobs and growth.
Business managers actually have the same kind of dilemma. On the one hand, many economic indicators are on the rise. In the US and UK, particularly, GDP growth looks to have turned a corner. And even if the eurozone isn’t quite so robust (which presents its own risks to those anglo-saxon economies), we’ve seen some interesting shifts in productivity, for example, that hint at a stable base for investment.
On the other hand? Well, there are still plenty of risks in the system – and it’s not entirely clear how well various economies (especially the ones heavily dependent on financial services) have righted the wrongs that caused the catastrophe in 2008. Markets look bubble-ish, geopolitical uncertainty abounds and even the climate looks set to shape corporate fortunes.