Catherine Burnet CA: Why CAs must shake off political uncertainty
By CA Magazine
28 October 2020
Elections can create disruption for business, but professionals should not lose track of their long-term goals, says Catherine Burnet CA.
The awkward relationship between politics and business is rarely more strained than during an election cycle. Business, of course, thrives on certainty – and there are few times more unpredictable than when an election appears on the horizon. Not only are the potential ramifications huge in terms of regulation and fiscal policy, but business also becomes a heated topic of public and political debate.
If there’s one thing we can know for sure, however, it’s that presidential elections in the United States will generate global uncertainty like clockwork. And this month’s election may prove that rule truer than at any point in the last 20 years. The long battle between Trump and Biden should reach its conclusion on the night of 3 November but experts predict it may rumble on for weeks, due to both increased postal voting and possible disagreements over the validity of declared results.
Speaking with colleagues and CAs across the pond, it appears that business has responded to the once-in-a-generation election by completing deals and restructuring at rapid pace. Whether professionals were in the midst of negotiations or considering a new venture, it became hugely appealing to make the most of that shrinking window of certainty.
Playing the long game
Accelerated deal-making is not an uncommon reaction in such circumstances – we saw similar trends in the UK preceding the general election of December 2019 – but this time it has been overlaid by the pandemic. It’s difficult to untangle the nascent economic recovery from pre-election jitters. And, in the long term, the road to recovery is likely to be far less straightforward than it appeared during the global financial crisis, due to localised and temporary lockdowns.
The present danger is that electoral uncertainty may encourage short-termism in both business and government. In the UK, in particular, the number of referendums and elections held in quick succession in recent years has magnified that risk. It’s far removed from the regimented, four-year election cycle in the US that provides some structure for business.
The lack of continuity in approach to the UK economy has often left businesses playing catch-up and, as a consequence, incentivised decisions that prioritise the short over the long term. It’s a difficult balance to achieve when you’re unsure of the general direction of the wider economic environment. And, for multinational businesses, it’s a problem that is magnified by global politics. It’s not just the UK that you need to plan around – it’s also other countries, other continents, with their own propensities to change direction suddenly via the ballot box.
The pandemic has made it much clearer that we are all global citizens. Something that happens on the other side of the world can physically reach us within a day – and the ripples across social media and financial markets are even faster. We’re all in it together. It’s why, regardless of electoral noise and political uncertainty across the globe, we must not lose sight of our long-term goals. Just as we have become accustomed to doing during the pandemic, plan for the unplannable and across multiple eventualities and timescales.