The chances of a hard Brexit have increased following a hung parliament in the UK General Election.
CIPS economist John Glen said pro Brexiteers within in the Conservative Party would be emboldened by the result, while EU negotiators would feel in a stronger bargaining position.
“Britain’s negotiating position as far as Europe is concerned has been destroyed. Why would they concede on anything?” said Glen.
Glen, who is a professor at the Cranfield School of Management, also warned of the possibility of a second General Election if neither the Conservatives nor Labour could form a government. A rise in taxes is likely to maintain the quantity and quality of public services, where pressure is being particularly felt in the areas of social and healthcare spending for an ageing population.
Uncertainty hit the value of pound, which fell by a couple of percent against the dollar and the euro after the result. Glen said in uncertain times households cut back on spending and firms reduced investment. He spoke of the UK being “laggards in terms of growth within the G7”.
His advice to procurement professionals was to form a Brexit plan. “If you haven’t got a plan you are behind the curve,” Glen said, referring to the CIPS survey that found a third of firms were planning to alter supply chains.
Glen also said buyers should brace for more regulation around public procurement, which policymakers would use to “develop good behaviours in terms of payment times and green behaviour”.
“All the stuff that was in the Labour Party manifesto, expect that to be adopted regardless of who forms the government. It’s relatively apolitical that all the parties want to see good procurement standards.”
The Labour manifesto said the party expected all firms supplying national or local government to have high standards of businesses conduct. This includes paying their taxes, recognising trade unions, respecting workers’ rights, protecting the environment and paying suppliers on time. The party said it would control executive pay by expecting companies supplying the public sector to move towards a 20:1 ratio between the highest and lowest paid.
Terry Scuoler, chief executive of manufacturing organisation EEF, said: “The Brexit negotiating strategy requires a careful rethink. Industry should be at the table, alongside whatever administration is formed, to help ensure we have the right negotiating position, which is something that’s been sadly lacking until now.”
Carolyn Fairburn, CBI director-general, said: “Politicians must act responsibly, putting the interests of the country first and showing the world that the UK remains a safe destination for business. It’s time to put the economy back to the top of the agenda.”
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