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Editor’s Letter: Tory story looms large over CFOs’ decision-making

THERE’S a phrasing ‘trend’ in the latest issue of Financial Director, a grouping of words that haven’t been prevalent in previous issues. In fact, it may well not have been used since April 1992.

The phrasing goes something like this: “…as the economy benefits from stability created by a Conservative-majority government…” or there and thereabouts. It’s definitely the running theme, the context, behind many of the articles published in the Summer issue of FD or online in recent weeks: whether the subject is lending, tax or jobs.

Notice that I didn’t mention the EU in that list. Of course, our European compatriots seem relatively happy with a Conservative government pretty much for the same reasons that advisers and business involved in M&As or capital investment would be: the fiscal and economic policies run by the coalition will broadly continue for the next few years.

But the EU is one of two hefty elephants in the room. An in/out referendum on Europe is destabilising, even though it is still some way off. The prime minister has already been on the receiving end of pro-EU PR, with think tanks suggesting that Britain couldn’t afford to be on the outside. This has been complicated, politically, by the extra clout that the SNP now has in the house.

Secondly, there are serious questions about the Conservatives’ ability to bring the books into balance by the end of parliament, and concerns about the impact of austerity on what is still fragile growth. Can the government create an environment in which the private sector will loosen the purse strings? You only have to look at the pressure it’s under from the financial sector, as bank head offices are up for emigration (for tax purposes, primarily).

For finance chiefs, it is still the case that they need to keep an eye on the minutiae – such as their cash position – an eye on wider, longer-term market trends, and a keen gaze on bigger, global socio-political trends.

That’s right – a third eye would help.

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