Political elections are central to the democratic movement, but they come at a price to the economy.
To understand this further, we should consider the recent impact of the British general election. Prior to the landslide victory enjoyed by the Conservative Party, experts had predicted the closest fought election in years and this created significant economic uncertainty. This was particularly evident in the property market, as while prices were expected to increase by 6% during the first quarter of 2015 this was significantly down on the previous rates of growth recorded throughout 2014.
Reacting to Political Uncertainty as a Business Owner
This showcases the uncertainty that can be created in the build-up to an election, but this extends far beyond real estate. With another election scheduled in the U.S. for 2016 and others planned for the foreseeable future, it is therefore crucial that business owners prepare for the economic consequences and make plans to negate them.
Stock Market Volatility
Just 24 hours after the result of UK election was announced, the FTSE 100 and FTSE 250 indices of all major London stocks gained by 2.3% and 2.8% respectively. This added a cumulative £50 billion to the market value of all associated companies, as investors rushed to capitalise on positive sentiment and triggered a peak in trading volumes.
The trends before and after this period were telling, however, as the market has experienced both volatility and decline either side of the election result. Companies looking to sell shares rushed to the market at the start of the year, for example, before the political campaigns of individual parties started in earnest. This spike in activity was followed by a period of calm at the start of the second financial quarter, before the Conservative’s landslide victory triggered rising value and volumes.
Since then the market has decline, however, with the FTSE 100 losing 1.3% during June. This has completed six months of volatility, boom and bust, and the message to business owners impacted by an election are clear. More specifically, companies that are floating on the stock market must remain fixed on their long-term financial objectives during the build-up to an election, as they try to understand the intrinsic value of their stocks and wait until after the result before reviewing their strategy.
The Value of Currency
As a general rule, the currencies of the major nations have performed consistently during the last 18 months. Both the Sterling and the U.S. Dollar have performed robustly, for example, while the Euro has suffered amid declining manufacturing figures and the continued struggles of Greece.
Prior to the recent British election, however, the Sterling experienced an understandable dip as the debate surrounding the outcome raged. The major concerns was how specific results would impact on relationships with the Europe and exporting, and during one weekly period the dollar leapt 18% against the pound. Sterling has subsequently rebounded since the result was announced, causing issues for companies that are reliant on internationals sales.
Ultimately, businesses that find themselves in this position must be prepared for such an occurrence and revised their pricing strategy in order to minimise any losses in revenue. In terms of the build-up to the election, it would also be wise to be proactive and identity periods of uncertainty that will trigger a decline in the value currency. This would be the ideal time to introduce promotions in a bid to drive sales.
Trending on Social Media
Outside of sales and financials, it is also fair to say that modern elections dominate the political landscape. As a result of this, businesses can find it difficult to engage customers or trend on social media during periods when policy issues and political debate are prominent.
With relevant, topical and engaging content now a crucial aspect of your SMO campaign and pivotal to your success as a business in 2015, however, an election provides the idea time for you to promote your brand. While you do not need to declare your position or allegiance to a political party (as this may be damaging for your brand), you can discuss issues objectively and advise potential customers on how they may be impacted by these going forward.
The key is to create fresh and insightful copy that is features phrases that are trending on social media, while it is also crucial that you tailor the content and create a unique angle that reflects your product or service.
This article was syndicated from Business 2 Community: The Uncertainty of an Election: How it Can Impact Your Business
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