The election result brought business relief but did not end its uncertainty for the future 

I would normally urge you to steer a mile from any opinion piece proclaiming what “business” thinks about anything. There is no such thing as business-in-the-abstract, any more than there are a ‘people’ that speak in unison. Businesses are all different, with views as diverse as the voters’.   

But allow me a momentary exception to this rule. At the extremes, this election marked a discontinuity the likes of which we have not seen since 1979, between two visions of the future as different as it is possible to imagine: Brexit versus no Brexit, public versus private ownership, a light increase in public borrowing versus a giant expansion. At times like this, the dividing lines are sharp and painted in primary colours. Business stood substantially on one side of the line. 

Most businesses will have been relieved by the result of the general election 

To be blunt, the election result will have been a relief to the bulk of the business community, even though some might have harboured a secret hope of stopping Brexit. The route to a reversal of the 2016 referendum result had looked ever more hazardous, providing a poor backdrop to plan with confidence even if it had led to an outcome – EU membership – much better for the economy than the alternatives. 

 The joyous reaction of the equity markets to the election underlines the truth of that cliché, “business hates uncertainty”. In recent months, as well as no deal, businesses had to weigh seriously the prospect of a Labour programme of government that included widespread nationalisation, corporate taxes some five percentage points higher, and the forcible transfer of 10% of equity into shared-ownership schemes. It would be disingenuous to portray the corporate world as indifferent between these scenarios. 

 So in the immediate future there will be signs of relief, and possibly actions, to back up the words. Business investment, which one would normally expect to see rising at this stage of the cycle, has been pretty flat for a year or two. It might finally start to grow again as long-forestalled projects are brought back on line.  

Business may yet pay the price for the prime minister’s determination to "get Brexit done"

But after the relief, what is next for business to ponder? Plenty, starting with Brexit and the still-unresolved question of how a big parliamentary majority emboldens the prime minister in his negotiating approach. The early signs are not good. You might have felt that Johnson would spend some of his abundant political capital on an extension to the implementation period and a comprehensive deal that better protects growth and manufacturing. There is a certain paint-by-numbers simplicity towards the logic here: the newly won “Red Wall” constituencies to which the PM owes his majority are full of manufacturing jobs that may not survive the rupture of a complete break. And it fits with the agenda of making Brexit boring again, to dismiss as obsessive the purists who might protest from the backbenches about a “real” Brexit. 

However, this is to underestimate the attraction of “Get Brexit Done” as a slogan. The Conservatives might well conclude from their electoral resilience that political capital is better spent weathering the storm of a post-Brexit downturn. Their supporters have already shown a willingness to bear economic hardship in return for a promise fulfilled, and might well again. It is not yet a certainty, but the likelihood is still a less-aligned relationship with the EU.  

The government will face pressure to stand up for consumers against business 

 In parallel with Brexit, the Conservative campaign promised that the government would be getting on with all the issues that really mattered to the country. The business agenda has been on hold since the middle of the year. Although the Johnson administration brought out a slew of over-ready announcements, such as a boost in support for electric vehicles, its distraction during an autumn of parliamentary tussles saw it produce little to mark out its overall business philosophy. This stands in sharp contrast to Theresa May, whose leadership campaign speech contained promises to crack down on executive pay, throw sand in the wheels of takeovers, and put workers on company boards. 

 The departure of Labour from the field of battle might be assumed to herald a lighter approach to the corporate world. I am not so sure.

First, this would make that mistake of assuming business is monolithic: some parts of it (small companies, the struggling high street) might demand reforms to others (the big four accountants, digital monopolies, banks). Second, not every agenda is pursued only for its party-political salience. For example, the electoral defeat of the party of nationalisation does not mean consumer concerns about utility rip-offs have been laid to rest. The Conservatives’ commitment to keeping the energy price cap is perhaps a sign of intent here. 

Business and government must listen to each other and develop policy together  

 Finally, there is a need to think harder about the whole question of how government and business work together. It is clearly too simplistic to see this along a one-dimensional spectrum, from mutual hostility at one end to uncritical adulation at the other. Nor should the two be seen as in a transactional relationship in which they bargain with one another for different “asks”. 

The aftermath of the EU referendum result saw government–business relations deteriorate. Business felt that it was being forced to show approval for a policy agenda about which it had serious doubts; government grew weary of what it saw as anti-democratic criticism. The initial shape of the industrial strategy afterwards – a patchwork of “sector deals” – proved an unstable basis upon which to rebuild these relations. The concept of a deal implies each side doing something above and beyond what it would do anyway. Truly sustainable policy can only be crafted if both sides are behaving as they would naturally, not forced into promises by a political bargain.  

There is a middle ground, on which the two sides can develop policy solutions to problems of mutual interest, such as reform of the apprenticeship system, the provision of better infrastructure, or the shift to lower emissions. To create such policy requires a deeper understanding, on both sides, of the interests and motivations of the other. The early decision to pursue a swift, non-aligned Brexit will make this challenging, but after so much noise and discord, there is now time for both sides to listen a little more.