Investing
HUNG PARLIAMENT CAUSES MARKET UNCERTAINTY 10 DAYS AHEAD OF BREXIT NEGOTIATIONS – ADAPTIVE INSIGHTS ADVISES BUSINESSES
The UK woke up to a hung parliament this morning, where the Conservative party failed to get the required 326 seats to secure a majority following the ‘snap’ election. With Brexit negotiations due to start in ten days, the need for smaller party support, and amid speculation regarding the leadership of various parties, businesses are having to adapt to a changing environment they’re not prepared for, according to Adaptive Insights CFO Indicator research (Q1 2017). Indeed, the pound has already fallen in value to the US dollar and euro, although seems to be recovering.
Rob Douglas, VP of United Kingdom and Ireland for Adaptive Insights comments:
“A hung parliament was certainly not the more ‘stable’ outcome Theresa May had hoped for, particularly given Brexit negotiations are to begin in ten days. The UK general election results also have a direct impact on businesses, as the markets they are operating in are arguably more volatile, making it much more difficult to plan and ensure the financial health of their business in the longer term. As a result, the need for agility in today’s businesses is greater than ever. In recent research, over half (60%) of CFOs say it takes five days or more to generate new scenario analyses, enabling them to model the impact of delays, changes, etc. such as this, and yet the majority would like it to be a day or less. This unmet expectation by CFOs sheds a light on the need for a different kind of financial planning that focuses on agility and active planning in nearly real-time to keep pace with the rapid changes in today’s businesses.
“As more detail comes to light in terms of how the UK will be governed and how Brexit will shape up, finance teams should be modelling scenarios and forecasting the possible impact on the business. By making the enterprise as prepared as possible for potential changes that may span personnel, taxes and tariffs, and currencies, to name a few, it will hold on to a level of stability beyond competitors. It is today’s planning that will decide which businesses survive in the volatile economic environment that is on the horizon.”
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