How Labour's 2024 Election Victory will shape your business growth and M&A Strategies

How Labour's 2024 Election Victory will shape your business growth and M&A Strategies

The UK witnessed political history on July 5th as Labour claimed victory in the general election after a major landslide win, taking the UK into an era of change.

The UK general election result was filled with many surprises, including Labour gaining 412 seats and the Conservative Party only gaining 121 seats. Ater a turbulent 14 years in power for The Conservatives, Labour are now the party in power with a goal for 'change' in the UK.

With Labour unveiling its goals and distinct policies, it is important to examine how the party's leadership will affect businesses, particularly in the UK and European markets, the affect within the M&A landscape, how significantly these policies will influence the business environment, and how they could shape the future of your business.

As a leading advisory firm, GS Verde Group's multi-discipline team offers expert guidance to businesses in the M&A sector, along with supporting businesses on how they can adapt and thrive amid changes in the political climate.

In this article, we explore the potential impacts and outcomes of Labour's policies on M&A activities and provide in-depth advice on how best to navigate these changes in today's political climate.

How Labour's 2024 Election Victory will shape your business growth and M&A Strategies

Overview of Labour's Economic Policies which will affect M&A market:

Throughout the election campaign, all political parties fought for a place in government and carved out proposed policies in their manifestos to change the current state of the UK.

Labour's core theme in its election manifesto centered primarily around 'change', and included various policies focused on fiscal stability, tax reforms and infrastructure investment - with an aim to boost economic growth.

Here, GS Verde Group looks at some of Labour's policies which will affect businesses:

  • 'Fiscal Stability': By introducing a 'fiscal lock', based on decisions made under former Prime Minister Liz Truss's leadership, one of Labour's goals is to ensure that no budgets will be made until economic expert advice and guidance is given.
  • Infrastructure Investment: Another of Labour's policies is to create a National Wealth Fund for future industries, with the goal to establish Great British Energy in order to drive renewable energy initiatives. By making these infrastructure investments, there is an aim to create jobs while being able to modernise energy infrastructure.
  • Tax Reforms: Tax reforms have been a large part of Labour campaign so far, with the aim to create a plan to boost government revenue by £7.7 billion annually. This will be done by clamping down on tax avoidance and forming tighter non-dom rules, increasing the quality of public services and infrastructure as a result.
  • Industrial Strategy: Labour has expressed its keenness to embrace the world of technology, particularly in AI and data infrastructure. With the party's goal to create 650,000 jobs within green industries, Labour's focus will be on supporting upcoming technologies and increasing innovation.
How Labour's 2024 Election Victory will shape your business growth and M&A Strategies

Understanding the implications of Labour's economic policies on M&A businesses:

Labour's win in the general election will no doubt create a shift within the M&A environment, as the party acts on its pledge to 'change' the course of the current economic climate.

Here, GS Verde Group examine the possible outcomes of Labour's proposed economic policies, and the long-term impact they will have on your M&A business:

  • 'Fiscal Stability': Having a fiscal lock aims to protect the UK from economic crisis and allow economic officials to monitor situations. The policy can help M&A businesses feel more confident regarding long-term planning for success and reduce economic risks in the business sector.
  • Infrastructure Investment: By making these infrastructure investments, there is a goal to create jobs as well as the ability to modernise energy infrastructure. This will greatly benefit the M&A market, as the investments will increase value and help companies look more appealing - becoming prime targets for sellers and buyer.
  • Tax Reforms: By creating a plan to boost government revenue by £7.7 billion annually, clamping down on tax avoidance and forming tighter non-dom rules to increasing the quality of public services and infrastructure, Labour looks to create a fair and clear tax system. This will remove unnecessary costs and uncertainties, enable the M&A market to become more attractive to investors when it comes to sellers and buyers and allow for smoother transactions.
  • Industrial Strategy: Given that one of Labour's ambitions is to embrace the development of AI and data infrastructure, along with the increase of jobs within green industries, M&A businesses could see a massive growth - especially the tech sectors. Labour's plans to invest in AI and data will no doubt make tech companies attractive targets to buyers and sellers. With the party's ambition to drive innovation and cutting-edge technologies, M&A businesses could expect to experience an increase in value and have the advantage of new business models.

Navigating the potential political changes in key M&A sectors:

Historically, the UK has seen many political changes because of election outcomes. These changes have greatly influenced M&A activities over the years and highlight the need for strategy and adaptability when it comes to political shifts. The changes also demonstrate the importance of planning, diversification, and the need for conducting regulatory business compliance to help navigate political changes in the UK.

In 1997, pro-business policies and deregulation under the Labour government encouraged a favorable environment for the M&A market, especially for telecommunications and utilities.

When the UK experienced a coalition government in 2010, the nation saw various regulatory changes which led to an increase in consolidation processes within affected sectors.

Despite not being an election, the Brexit referendum in 2016 created an environment of complete uncertainty. During this time, the UK saw activities within the M&A landscape temporarily slow down, which had a knock-on effect regarding delay in deals and relocations.

Throughout the 2024 general election campaign, Labour has voiced the need for 'change' and is determined to install stability in the current economic climate. This also includes a more stable environment for M&A transactions.

Looking ahead to Labour's UK Leadership in Government, the party's policies encourage a more stable and predictable environment for M&A activities, along with making sure there is fair competition and reduced costs.

M&A sectors can expect to see an increase in activity as there becomes more of a focus in these areas. An increase in valuations is also to be expected along with the advantage of becoming more attractive to potential buyers within the M&A market. As with any change, regulations are expected to slow the speed of M&A transactions as businesses adapt to new procedures. This will pave the way for a more robust M&A market, bringing long-term benefits to the UK.

We are also expected to see a government that will put into place stricter tax regulations that will ensure a long-term fair system, a focus on the renewable energy sector and growth opportunities in the AI and data infrastructure.

Another of Labour's policies is to tap into the construction and real estate sectors to carry out the party's goal of building 1.5 million homes, as well as the upgrade of transport infrastructure. With this in mind, the UK will see an increase in services across the board which will, in turn, bring in an increase in M&A activities.

Expert Advice from GS Verde Group

As the monumental political shift in the UK government gets underway, it is vital that business owners are prepared for every economic change that Labour have planned that could potentially affect businesses.

At GS Verde Group, we are always keeping up to date with political climate changes and position ourselves as specialists when it comes to guiding your business through the complexities of M&A activities. We encourage companies to stay informed of regulatory changes and due diligence under the new Labour government, and to adopt flexible strategies to mitigate risks and increase growth opportunities.

As a multi-discipline team with expertise in navigating political and economic changes, we can assist your business in strategic planning, ensuring resilience and adaptability to the evolving political climate.

The GS Verde Group are business-focused experts in getting deals done. Combining all the services needed to complete a corporate transaction, including legal, corporate finance, tax, accountancy, and communications, GS Verde acts as a complete advisory team and provides a truly end-to-end service.

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