UK tech market faces slowdown as general election announced

Six weeks from today, the UK will be heading to the polling stations again. Speaking in Downing Street yesterday, a rain-soaked, D:Ream-serenaded Prime Minister Rishi Sunak called a general election to be held on 4 July.

The campaign will be one that pitches change against stability. The Prime Minister said the country needs to "decide whether we want to build on the progress we have made or risk going back to square one with no plan and no certainty." Labour Party leader, Keir Starmer, said, "That opportunity for change is what this election is about". The election is also set to be one that feels more personal and presidential than previous campaigns.

Parliament will be dissolved on 30 May, which provides five days for the wash-up period. Any unfinished parliamentary business will be lost at dissolution, so we will see some frantic days of effort, which will require co-operation of the Opposition, to pass key legislation that is still in progress. There are currently 214 active bills at various stages of scrutiny going through Parliament; there will only be sufficient time for a small proportion of these to pass in their current form.

The Digital Markets, Competition and Consumers Bill, which is intended to regulate and increase competition in digital markets, is in the final stages of approval (see View from the Chief Analyst: CMA and the perceived power of GAMMA(N)); however, the Data Protection and Digital Information Bill has further to go.

To ensure government resources cannot be used for party political campaigning, we will enter a 'pre-election period of sensitivity'. This period, which was previously referred to as 'purdah', is likely to correspond with the dissolution of Parliament and will mean any significant, controversial or long-term programmes where a new government is likely to hold an opinion will be paused.

Commenting on the announcement, TechMarketView's Chief Analyst, Georgina O'Toole, said, "Uncertainty is a growth suppressant. Across Whitehall, with the previous expectation of an autumn election, we had already witnessed changing behaviours. Departments had sought to spend their budget ahead of a pre-election hiatus, while in parallel, delaying any major decisions that might be reversed under a new government. Meanwhile, in the private sector, we have witnessed economic uncertainty translate into caution and a stifled—and more challenging—UK tech market.

Now, the date of the General Election is a certainty. But who will be in power is not. In Whitehall, the 'pre-election period' will arrive sooner than expected. It will slow the UK public sector tech market down over that period and post-election it will take time for any new policies to be implemented and new procurement activity to pick up. Suppliers to the public sector (central government, defence, and health in particular) are in for a tough ride the next few months. We are unlikely to see much of a pickup until Q4.

Meanwhile, in the commercial sector, recent positive news on inflation and on interest rates had the potential to give organisations the confidence to start making some bigger investments (although wider global turbulence remains); however, the election brings new uncertainty. Will a new government and a different economic policy change the current direction of travel? In the short term, we will also likely see a slowdown in private sector decision making too."

Posted by Dale Peters at '09:14' - Tagged: policy   election   government   public+sector