The impact of the UK general election on IR activity
This article was produced by ELITE Connect and originally published on the ELITE Connect platform
Theresa May’s announcement of a snap general election comes hot on the heels of months of political and market turmoil following last year’s Brexit vote in the UK. Here, we look at the pressures that this politically charged environment could bring, and hear some expert advice on how best to deal with its demands.
Steve Nightingale, director of IR for FTSE 250 company Britvic, has observed little impact on his company or its IR activity, but acknowledges that the uncertain political landscape has few positives to offer investors or companies. ‘We’re not seeing the general election have a specific impact on Britvic or our IR program,’ he observes. ‘Setting aside all political affinities, however, I think all investors and companies appreciate certainty. If we achieve that during this election, it will benefit both companies and the financial markets in general.’
Perhaps an illustration of the impact of the general election is to compare the effect of its announcement with Brexit, the last major event in the UK political landscape. For Britvic, the two are at opposite ends of the spectrum, with Brexit having a significant, if short-lived, influence.
‘Just after the referendum we saw downgrades on future earnings because of foreign exchange rates and the weakening of sterling, increasing costs,’ says Nightingale. ‘The seismic impact at the time frightened the markets and we did see our share price fall, but it has since recovered. The attention from our investors now surrounds the impact on consumer confidence, the effect on disposable income and the influence these factors may have on our business.’
Fiona Tooley, executive director at TooleyStreet Communications, has worked directly with small and mid-caps for many years, experiencing the impact of numerous elections and political issues. For her, IROs need to focus on consistency and constructive messaging when tackling the uncertainties that politics involves. ‘In this global world where we all operate, somewhere there will always be some macro or political influence,’ she says. ‘What we have to ensure is that the focus remains on the positive contribution our clients make to a local and global economy in the face of this.’
Nightingale adds that a back-to-basics approach is key, as is transparency and honesty. ‘Focus on your fundamentals and the long term, while recognizing the short term and the challenges you face,’ he recommends. ‘Investors appreciate an honest appraisal of any challenges, so avoiding putting a positive spin on everything – it will only come back to bite you later!’
‘And don’t panic!’ concludes Tooley. ‘During elections or periods of uncertainty, the media is more focused on the political arena and any weaknesses, rather than positive commercial stories. This can distract some investors, so the overriding focus for the IR team should be to work as a team, listening and watching, and to initiate a strong targeted IR and media program of activities that can deliver the messages and news flow to key investors, potential targets and market commentators.’