UK Politics

CBI warns of 'power vacuum' after election

David Cameron, Nick Clegg and Ed Milibnd at a recent church service to commemorate the end of UK combat operations in Afghanistan Image copyright PA
Image caption Both David Cameron and Ed Miliband say they are rooting for an overall majority

The CBI has warned of the dangers to the UK economy of a "power vacuum" in the event of no party winning an outright election victory in May.

The employers' group urged all parties to minimise "post-election uncertainty" and not to "duck tough questions" in discussions on forming a government.

Whoever takes office, it said, must agree a spending review and commit to action on EU reform and air capacity.

In 2010, it took five days for a new government to be formed.

Conservative leader David Cameron and his Labour counterpart Ed Miliband have insisted that their parties can win an overall majority in the 7 May poll.

But current opinion polls suggest the election could result in another hung Parliament, with no party winning enough seats to govern on its own.

In such an event, the CBI has warned that the "horse-trading" that is likely to follow cannot be allowed to distract from the urgent challenges facing the next administration.

'Clear plan'

It said anyone involved in post-election negotiations must not lose sight of the need for a "clear delivery plan" for the public finances within the 100 days of the election.

Any new government is expected to unveil an emergency budget within months of taking office, as Chancellor George Osborne did in 2010.

But the CBI said a new government must also quickly decide on the terms of its next spending review, expected to cover the period between 2016 and 2020.

It also wants politicians to commit to implementing in full the final recommendations of a report into future capacity at Heathrow and Gatwick airports, publish a "road map" for corporate taxation and outline a Europe-wide reform agenda.

"Whether we have a majority, minority or coalition government, we ask those involved to ensure that the period of post-election uncertainty is kept to a minimum," said the organisation's director general John Cridland.

"We cannot afford a power vacuum that delays urgent policy decisions and unsettles potential investors, so any new Cabinet must get down to business as soon as possible.

"But if horse-trading is required to form a new government, politicians must not duck the tough questions just to reach agreement and risk undermining the recovery before the ink has dried."

Despite warnings of market instability in the days following the 2010 election, the Conservatives and Lib Dems say their coalition agreement helped avert a Greek-style sovereign debt crisis.

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