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Impact on Business and Insolvency of General Election 2024

With Labour winning the 2024 general election, significant changes are on the horizon for UK businesses and the insolvency landscape.

The shift in political power brings a new set of economic policies and priorities that will shape the business environment in the coming years.

This article delves into how Labour’s victory will affect businesses, particularly in terms of taxation, support for small and medium-sized enterprises (SMEs), and insolvency procedures.

How Labour's Election Victory Will Impact Business and Insolvency

Economic Policies and Taxation

Corporation Tax and Business Rates

Labour’s manifesto promised to cap corporation tax at 25%, the lowest in the G7, for the entire parliament.

This move aims to provide stability and predictability for businesses, allowing them to plan long-term investments with confidence.

Additionally, Labour plans to overhaul the business rates system to create a fairer tax environment that benefits high street retailers and small businesses while addressing the burden on commercial properties.

Fiscal Responsibility

Labour has emphasized a commitment to sound money and economic stability.

The party’s fiscal rules include balancing the current budget and reducing debt as a share of the economy by the fifth year of their term.

This approach is designed to ensure sustainable public finances while allowing for prudent investment in infrastructure and public services

Support for SMEs

Late Payments and Access to Capital

Labour has pledged to tackle the issue of late payments, which can severely impact the cash flow of SMEs.

By enforcing stricter payment terms and providing better support through the British Business Bank, Labour aims to create a more supportive environment for small businesses.

The reformed bank will have a stronger mandate to support regional growth and innovation

Government Contracts

Increasing SME access to government contracts is another key policy.

Labour plans to reform procurement rules to ensure that small businesses have a fair chance to compete for public sector work, potentially opening up significant opportunities for growth and stability in the SME sector

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Infrastructure Investments

National Infrastructure Strategy

Labour’s commitment to developing a ten-year infrastructure strategy will focus on improving transport, energy, and digital infrastructure across the UK.

This strategy aims to boost regional development and provide the private sector with the certainty needed for long-term investments.

Key projects include enhancing rail connectivity, especially in the north of England, and ensuring comprehensive gigabit and 5G coverage by 2030.

Housing Development

Labour plans to address the housing crisis by building 1.5 million new homes over the next parliament.

This initiative is expected to create jobs in the construction sector and related industries, stimulating economic growth and providing more affordable housing options for workers.

Insolvency Landscape

Insolvency Support

Labour’s focus on economic stability and support for SMEs is likely to have a positive impact on the insolvency landscape.

By creating a more predictable tax environment and providing better access to capital, Labour aims to reduce the financial pressures that lead to insolvency.

Additionally, the party’s commitment to tackling late payments and providing greater support for businesses through government contracts can help improve cash flow and financial stability for many companies​

Insolvency Support

Labour also plans to review and potentially reform insolvency laws to ensure that businesses in distress have access to the necessary support and can restructure effectively.

This may include measures to simplify insolvency procedures and provide more robust support for businesses facing financial difficulties

Conclusion

Labour’s victory in the 2024 general election marks a significant shift in the UK’s economic policies, with a strong focus on stability, support for SMEs, and substantial infrastructure investment. These changes are expected to create a more supportive environment for businesses, potentially reducing the incidence of insolvency and fostering long-term economic growth. As these policies begin to take effect, businesses should stay informed and seek expert advice to navigate the evolving economic landscape effectively.

For detailed support and guidance on how these changes may impact your business, contact Business Helpline.

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    Andy Slinger

    Andy is Head of Marketing for Business Helpline with a wealth of experience Marketing in the financial sector. He has a passion for helping business owners struggling with debts.