On Thursday evening, about 70 people, including more than a dozen bosses of FTSE 100 companies, gathered in the yellow-brick home of public relations adviser Roland Rudd to await returns from the British elections. Just after 10 p.m., as exit polls indicated voters had turned against Prime Minister Theresa May, a stunned silence descended on the ground-floor reception room.
Most surveys had suggested May would extend her parliamentary majority, and as the party-goers absorbed the latest U.K. electoral shock, BAE Systems Plc Chairman Roger Carr sought to calm his peers, urging them to focus on their companies rather than worry about factors beyond their control.
“The political landscape may have changed, but there remains a clear mission to build a stronger United Kingdom through Brexit and beyond,” Carr said.
The possibility of another change of government means more instability for business after a year in which companies have struggled to come to grips with Britain's planned exit from the EU and a plunge in the pound. Executives now face continued political turmoil, and the currency’s renewed fall added to concerns that May will be forced to resign.
“Theresa May’s ability to negotiate Brexit is fatally compromised,” said Harry Briggs, a partner at BGF Ventures, a tech investment firm. “She’d be a laughing stock both in Europe and in Parliament.”
Executives were unenthusiastic about both of the top candidates but were particularly alarmed by Labour after its leader, Jeremy Corbyn, moved the party to the left with calls for higher taxes and renationalization of the railways and postal service.
While business was generally more supportive of the Conservatives, the ardor was tempered by concerns about May’s call for a hard Brexit—a complete break with the EU—as well as by her proposals to crack down on executive pay, more closely scrutinize corporate takeovers, and give workers a greater voice on boards.
“The May team seemed to pay little attention to business in the run-up to the election,” said Rob Kniaz, a partner at Hoxton Ventures, a London firm that funds Internet companies. “I’m scared now they will further ignore tech startups.”
A stalemate in Parliament means a political void, which will complicate planning for companies. A falling pound puts further pressure on importers and helped sink shares of retailers ranging from grocers Tesco Plc and J Sainsbury Plc to floor-coverings provider Carpetright Plc. Elsewhere, Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings Ltd., a big investor in U.K. retail and telecommunications, slumped.
“The biggest concern for us in the short term is what this does to the value of the pound, and the effect that has on inflation and the health of our economy,” Domino’s Pizza Group Plc CEO David Wild said.