Purdah: Business implications and effects on Brexit negotiations

• What is purdah?

The ‘purdah period’ or period of sensitivity is a Civil Service Code which prohibits any sensitive announcements by Government prior to an election or a referendum. It is not a legal requirement to implement a purdah period.

• Why does purdah happen?

Purdah is primarily implemented to prevent the Government from issuing news announcements intended to influence the Election result.

• How long is a purdah period?

Purdah time limits are not defined, but as a general rule of thumb the period lasts for four weeks prior to a local election or a referendum, or six weeks prior to a General Election.

• Why is a double purdah period unusual?

As we are already in the purdah period for the local Elections on 4th May, the Prime Minister’s announcement of a General Election being held on the 8th June means the Country will begin a second six week purdah period before the Local Elections are held.

A double purdah period which overlaps is highly unusual and it will mean a possible a nine or 10 week period where the government cannot comment on sensitive issues which is an unusually long period of time for a government to remain quiet.

• In practical terms what does purdah mean for businesses?

The concern is that purdah may delay businesses from making investment decisions and lead to a slowing down of the economy over the next few months. For example, if the announcements of new funds, such as the Northern Powerhouse Investment Fund are delayed, businesses may decide to defer investing until they have certainty that the funding will be available.

If there is an economic slowdown as a result of the General Election announcement the impact will be felt in the service sector most quickly, which will be particularly bad for the South East as the powerhouse of the UK economy. Larger service businesses could be particularly vulnerable as they will typically be slower to react to market changes than smaller and more agile firms.

• How will purdah affect Brexit negotiations?

Purdah will produce an interesting dilemma for Brexit negotiations. In theory no political party should be able to issue announcements related to the sensitive issue of Brexit. In practice no political party would receive votes from the electorate unless it issues clear Brexit policies.

Whichever party is elected, no newly elected government will want to disclose its negotiating strategy to the EU. So it remains to be seen how each party will give a clear idea of its Brexit negotiations, without making a sensitive statement and equally without weakening its future negotiating ability.