The global chairman of PwC has warned that uncertainty around Thursday’s election is weighing on the minds of businesses which are preparing for the unexpected after Brexit and the US presidential vote.
Bob Moritz said businesses would be viewing the General Election very differently had it taken place at the same time last year, before the UK referendum or Donald Trump’s victory.
“Everybody’s watching. They’re probably assuming a certain outcome, but they’re watching carefully because everybody’s been surprised over the last year or so,” Mr Moritz told the Press Association in St Petersburg.
“I think the election is just another needle in the haystack that is tipping the balance… because there is so much uncertainty and there are so many different compounding effects of that uncertainty that these institutions are scenario planning quite a bit,” he added.
“So everybody’s going to watch carefully and adjust accordingly.”
The Labour Party could make waves for business after pledging to reverse corporate tax cuts – raising the rate to 26% – and increasing taxes on certain financial instruments such as derivatives.
However, Mr Moritz said he does not expect client demand for tax advisory services to rise if Labour gains power.
“I don’t’ see it changing significantly one way or another – there’s enough uncertainty in tax today, irrespective (of the election result)… because not only are you dealing with rising tax rates… it’s also the play between countries on a worldwide basis.”
More broadly, accountancy giant PwC is seeing clients take part in much more scenario planning to deal with a raft of crises that have gripped the business world in recent years.
“It could be an election one day, it could be natural resources and the price of oil another day, it could be a terrorist attack on the third day, so it’s the combination of all that that’s causing them to scenario plan more so than this particularly election right now.”
While businesses may still expect a Tory majority after Thursday’s poll, Mr Moritz said PwC has been advising clients to look past party politics and make investment plans based on broader economic trends.
“The reality is parties have come and gone for the cycles… the underlying trends irrespective of a party are the ones that are driving growth, driving their opportunities.
“It’s the demographics to follow, not so much the party – that’s really driving where they’re making investments in customers, in products and services and then ultimately the supporting infrastructure necessary to make that happen.”
PwC has itself hit two rough patches over the past year, following the Oscar blunder that saw La La Land mistakenly awarded the best picture title, and a £5 million fine for “misconduct” in relation to its 2009 audit of Connaught – a property services firm that went into administration in 2010.
Mr Moritz stressed that PwC had openly admitted human error in the wake of the Oscar mix-up and has continued to work on building trust.
“The reality is, any institution has to deal with trust each and every day, and you can lose it in an instant.
“Now the good news is that PwC is still at a relatively high level but in order to have trust you need to make sure you do the basics really well, and you’ve got to make sure you acknowledge your faults and adjust accordingly,” he said.
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