In considering what 2020 holds for our clients and business in general, this has to be written with a general election outcome caveat.
Economic analysts are beginning to upgrade their economic forecasts for the country for 2020 which is good news. However, these upgrades are partly based on the spending pledges of the main Political parties currently campaigning for our vote. Assuming it does come down to one of the usual suspects returning to number 10, there will be some major spending on infrastructure and public sector budgets will be topped up – although many departments will still be nowhere near 2010 levels it should be noted. But do these pledges add up to an economic boost that we can rely on?
It is surprising to see the analysts viewing these pledges in such a positive light when so many of them seem completely unrealistic to the man in the street. Based on the current tax regime many pledges seem incapable of being fulfilled within a 5-year Parliament without significant tax rises for the majority of taxpayers. So, if we are to make the assumption that it will be a Conservative or Labour majority government, we must also make the assumption that 2020 will see tax rises, or at the very least, no further tax incentives/cuts for businesses or entrepreneurs. The planned reduction in corporation tax, originally designed to make us one of the most attractive western economies from a business tax perspective, will be scrapped by the Tories and reversed by Labour, meaning the prevailing rate will either stay as it is or once again begin to creep back up. There is also talk of removing the dividend tax allowance completely which is one of the biggest threats to small business owners.
Subject to the outcome of 12th December, the thorny issue of Brexit will also dominate, at least the early part of, 2020. As long as we get a decision either way and can begin to put this to bed and move forward, the stability of certainty could have a positive impact. However, the exact detail and method of our departure, should it happen, will still be decisive for many.
The majority of our clients have continued to demonstrate resilience during 2019, with many posting profits despite the turmoil surrounding the economy. But this is set against a backdrop of uncertainty rather than hard facts and legislation, which can be harder to overcome. Resilience, however, is not uncommon and is a recurring theme amongst the country and our client base. Some will say it is the British spirit of courage through adversity and it is hard to disagree. The events of recent years have threatened to derail the entire show on numerous occasions and yet we fight on. Growth is pegged back to a low rate, but it is growth – when it could quite easily have been negative.
So, whilst the analysts are beginning to make predictions for the longer term, it would be a brave man to step up and say, with any degree of certainty where we will be in 12 months’ time. Perhaps the only certainty one can predict for 2020 is a year of significant change – because we need one of those!