PEST Analysis: Political Factors in the UK

10th Jun 2019
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The political landscape in the UK is currently dominated by Brexit. Whichever side of this debate you are on, one thing we can all agree on is that we don't yet know what is going to happen. That makes planning ahead tricky. Because at the same time as being the most significant factor at play, there seems so far to have been little progress.

So, what can we say? Well firstly just that. We need to build into our budgets and forecasts contingency plans to cover us against various possible scenarios. What those are will depend on the type of businesses you work in or with and the sectors they operate in. We will cover this in a later blog on the economic factors.

There is a strange paradox: things seem to be happening quickly, but nothing is ever resolved. The two main parties were given a pretty big hammering in the recent local European elections. Both the Brexit party and the combined remain parties are claiming a victory. Prime Minister Theresa May has now resigned. Politicians of all persuasions queue up to say that they get the message, but what message is not so clear! Everyone wants to sort it out but their solutions remain as fragmented as ever.

That leads to the second issue. Brexit appears to have sucked up all the resources available, leaving inertia elsewhere. Nothing much has been happening because so much effort has been diverted to planning for Brexit. So don't expect too much decisive action from other government departments until Autumn at the earliest.

In some areas, the lack of resources may cause us problems, particularly for any of us in the SME sector. HMRC has gone on record saying that they don't have the resources to manage the key projects they are trying to deliver, and plan for Brexit scenarios at the same time. MTD has been delayed, they have recently lost several high profile IR35 cases, and Payment on Account tax demands failed to go out. Add to this the mounting mess that is the Loan Charge tax demands and you can see how quickly things could start to go wrong.

Finally, climate change looks set to make the jump from being a background social factor to a major political issue. From Michael Gove meeting with the Extinction Rebellion protestors, the recent visit of Greta Thunberg and the Labour Party's attempts to declare a climate emergency, all the main parties are now talking about pretty drastic action. How would that affect your business? Can you get onto the front foot and make a virtue out of becoming greener? Is it a big challenge to your company, or will it leave you relatively unaffected - professionally at least? For some it will actually be an opportunity. It is not cynical to see it like this; if your organisation could make changes and become part of the solution, then you should make sure you capitalise on that.

These are just some thoughts on what is happening politically in the UK. But there may be issues that are affecting your organisation much more directly. To get you thinking, here is a useful list:

Classic political factors

  • Political stability - especially if you operate in multiple regions
  • Tax policies and how they might change
  • Labour laws - working week / minimum wage / mandatory expected benefits / rights to hire and fire
  • Environmental law
  • Industry safety legislation
  • Trade restrictions
  • Product labelling requirements
  • Tariffs
  • Globalisation
  • Public vs private - what the state does and does not do in different regions
  • Merit goods and services - things the government wants to encourage / incentivise
  • Demerit goods - things the government wants to discourage, often through laws or taxation
  • Health system
  • Education
  • Infrastructure
  • Cycle of elections
  • Property and intellectual property rights and the general rule of law


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