British business leaders on Thursday welcomed Boris Johnson’s decision to resign as a chance to end recent political instability, calling for a swift transition to a new administration to help companies cope with soaring inflation and the threat of recession.
Lord Stuart Rose, former M&S boss and Conservative peer, called for the prime minister to leave Downing Street quickly given his “unsustainable” position.
“He should go,” said Rose, adding that although decisions were needed now to tackle the economic crisis facing the UK, any made by Johnson would undermine his successor. “It doesn’t give the next person a clean sheet. He has got to go.”
Tony Danker, director-general of the CBI, the business lobby group, warned that the country could become “stuck in limbo” during the Tory party leadership contest. He added that the contest risked over-politicising parts of economic policy by stoking culture war divides in areas such as the environment.
Multiple executives told the Financial Times that Johnson’s administration had damaged business confidence at a time when the government needed to be a steady hand to prevent a lasting economic downturn.
Others went further, with one person at a leading law firm saying she and her colleagues had “already opened the champagne” on Wednesday night before Johnson resigned.
Richard Burge, chief executive of the London Chamber of Commerce and Industry, said events in Downing Street had risked seriously harming the economy by making the UK resemble “a corrupt authoritarian regime” that “exude[d] incompetence and amorality”. “This undermines business confidence . . . and hammers a nation already on its knees,” he added.
Stephen Phipson, head of Make UK, which represents the manufacturing sector, said recent months had been “immensely damaging for the reputation of the UK . . . with an increasing absence of the stability and certainty which is essential to provide” investment confidence.
Meanwhile, Melanie Leech, chief of the British Property Federation, said the past few weeks had “damaged the UK’s international reputation and attractiveness to the global investment . . . essential to the revitalisation of our towns and cities”.
Johnson never gained the full confidence of the UK business community. His 2018 “fuck business” remark, in response to industry concerns over Brexit disruption, was used against him whenever he introduced measures seen as putting party politics above the economy.
Many of these criticisms related to his decision to push through the harder elements of Brexit, such as new UK certification markings, the dispute over Northern Ireland or the lack of progress on financial services co-operation with Brussels.
Johnson was, however, applauded for working with former chancellor Rishi Sunak over the £400bn of Covid-19 business support that kept many companies operating through the pandemic.
Some executives now worry about the future of several key policy areas, and especially for the City of London.
Johnson had been planning a series of tax cuts, including potentially freezing the proposed increase in corporation tax. The Treasury has also been pushing to unlock investment from pension funds and to ease rules around capital markets to encourage companies to raise money in the UK.
Further City reforms were due to be unveiled by Sunak this month in a Mansion House speech. Those close to work on the reforms say it is not clear if these will still be announced, or whether such policymaking needs to wait until a new regime is in place.
“No one knows,” said one person close to the work, which focuses on easing the rules around secondary capital raisings. “It could be two weeks or two months.”
There are also broader concerns about when businesses will receive help to combat soaring costs caused by inflation.
Craig Beaumont, external affairs chief at the Federation of Small Businesses, said: “We have had no solutions to the problems facing businesses and now the worry is there will be a further delay.”
Juergen Maier, vice-chair of the Northern Powerhouse Partnership and former boss of Siemens UK, said “the chaos and toxic environment in government” had been “extremely worrying”. “A lot of trust has been burnt and it is going to take very strong leadership with integrity at its core [to restore it],” he added.
Business leaders stressed the need for a new administration to devise a better plan to improve the economy, but some warned that simply cutting taxes would only worsen inflation.
Lord Jim O’Neill, former Goldman Sachs economist and ex-Treasury minister, called for a “coherent, credible, consistent economic framework that truly delivers on levelling up”, adding: “Many business people will clamour for corporate tax cuts but I think it would not be very wise.”
Martin Sorrell, executive chair at digital marketing group S4, said tax reductions would be welcomed by many — especially low-income workers — but questioned the state of government finances. “We need a detailed plan laying out short-term pain and long-term gain to remove current uncertainty,” he said.