Odgers Berndtson and Deloitte Legal Breakfast: The Business Impact of the Election

Katie Prescott, Technology Business Editor at The Times, chaired a panel of guest speakers including Lord Charles Falconer, Partner at Gibson, Dunn & Crutcher and former Labour Lord Chancellor, Rosemary Martin, Senior Advisor at Deloitte Legal, and Ian Stewart, Chief UK Economist at Deloitte.  

In the aftermath of the UK general election and in the lead-up to the government budget announcement, the panel brought a wealth of knowledge and experience to discuss some of the resulting themes of political, economic and regulatory change that impact the UK business environment, with a particular lens on supporting Chief Legal Officers navigate this change. 

The UK economy and consumer sentiment

Ian began the discussion by mapping out the current position of the UK economy, which has shown remarkable resilience with faster growth in the first half of the year compared to other G7 economies. This is despite recent years of stagnation and significant challenges such as the pandemic, inflation, and the energy crisis. While growth has slowed in late summer, the outlook remains positive with potential rate cuts from the Bank of England expected next year.

However, public finances remain a critical issue, with ongoing high debt levels and cautious consumer sentiment, reflecting past economic shocks. Stability and growth remain paramount as the new government addresses these challenges. 

Government budget focus 

In the lead up to the budget, the government aims to solidify its economic stance and demonstrate fiscal responsibility. Lord Falconer explained the key areas of examination include the scale of the public finance challenge, the necessity of adhering to self-imposed fiscal rules to maintain market trust, and the commitment to sensible public finance management. 

Employment laws 

The government’s employment law proposals include basic worker rights – for instance flexible working - from their first day of employment, fair probationary periods and “switching off” outside of working hours. 

Rosemary explained the government’s clear intention to consult with employers and companies to ensure the legislation makes practical sense and will work correctly. Smaller companies should also be given due consideration; while large organisations have the resources to adapt to new regulations, small start-ups face greater challenges in meeting stringent requirements, and it is also more difficult for small employers to voice their concerns effectively. 

Tax predictions 

Looking ahead to the upcoming budget, Ian detailed Labour’s commitment to approximately £9 billion in tax rises, focusing on measures such as school fees and carried interest. Significant speculation on budget plans, especially with the emphasis on not raising taxes on working people, has led to discussions about capital gains tax, inheritance tax, pension tax relief, and possibly council tax adjustments.

Considering the financial context, it will be interesting to see if the government will also address fuel duty, which historically has been a sensitive issue. Given the current fiscal challenges, any tax increases, even substantial ones, may have limited impact on the broader public spending landscape.  

Lord Falconer addressed concerns about the potential impacts of increasing Capital Gains Tax (CGT) on entrepreneurs and the broader business climate. He emphasised the necessity of maintaining an entrepreneurial environment in the UK while also ensuring adequate funding for public services within the constraints of fiscal rules.

Furthermore, he highlighted the critical importance of the UK's reputation for law and order, noting that inadequate support for the justice system could undermine the country's unique appeal as a secure place to do business.

Advice for CEOs 

The government's focus on stricter regulatory enforcement, particularly in ensuring compliance with both existing and new laws, underscores the importance of maintaining robust legal and compliance teams. Additionally, the ongoing emphasis on climate change initiatives presents both opportunities and challenges, demanding cautious attention to sustainability practices.  

Odgers Berndtson’s Legal & Professional Services Practice supports CEO's and their boards in identifying the right Chief Legal Officers, building outstanding leadership teams, and supporting senior leadership requirements within private practice firms. Our extensive expertise in the legal field combined with a global network of world-class executives ensures poise and agility in an ever-changing landscape. 

The Odgers Berndtson team would like to thank to our panel chair and speakers warmly for their participation in the discussion. 

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