Country risks impacting daily trade and investment

09 January 2017

Organisations with international operations are exposed to counterparty and country risks in the course of their daily trade and investment.

In this monthly report we provide a detailed forward-looking assessment of developments within the security, trading and investment environments for France, Germany, Netherlands, Italy and the UK. This report highlights both the risks and opportunities of operating in these countries.

Below is an overview of the risk forecast for each territory:

France

The nomination of right-leaning François Fillon as the candidate for Les Républicains (LR) in the May 2017 election reduces the likelihood of an anti-establishment victory for Marine Le Pen of Front National (FN). Whilst Fillon’s proposed economic reforms would elevate the likelihood of strikes and civil unrest following his election, their implementation would create a more attractive regulatory environment for private sector investors.

Germany

Despite the growing impact of right-wing populist party Alternative for Germany (AfD), it is likely that Angela Merkel will remain as German Chancellor following the federal elections, scheduled to take place between August and October 2017. Fiscal conservatism will continue in the medium term, although over the long term infrastructure spending and the move towards renewable energy sources will provide opportunities for private investors.

Netherlands

A fragmented coalition is the most likely outcome of the March 2017 election in the Netherlands, with the right-wing Party for Freedom (PVV) expected to be shut out of power despite potentially gaining the most votes nationwide. Whilst domestic demand will contribute to healthy economic growth in 2017, the threat of increasing global protectionism poses long-term risks to the Dutch economy.

Italy

The rejection of a series of constitutional reforms in the 4 December 2016 referendum will elevate Italian political and economic risks in 2017. Political instability caused by the resignation of Prime Minister Matteo Renzi will inhibit decisive action on economic reform, whilst reduced investor confidence will make state intervention in the ailing banking sector a necessity.

United Kingdom

With Brexit negotiations set to begin in 2017, the UK faces a period of economic uncertainty as it reshapes its trading relationship with the European Union (EU). Economic growth will slow down in 2017 as a result of this, with the government likely to use infrastructure spending to stimulate the economy. In the long term a strong pipeline of infrastructure projects will provide a boost to the construction sector.

Download Risk Outlook

For further information, please contact Eleanor Smith, Political Risk Analyst on +44 (0)121 626 7837 or email eleanor_smith@jltgroup.com

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