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Uncertainty for exporters in European election year

Uncertainty for exporters in European election year article image

Australian businesses who conduct or are looking to do business with partners in key European countries should be cautious as a result of changing economic and political conditions.

The warning comes from Atradius, a leader in risk management and credit insurance.

As 2017 is a major election year in Europe, the European political stage may change drastically over the course of the year, said Mark Hoppe, managing director ANZ, Atradius.

“The Dutch and French elections may set the stage for voters in Germany, and perhaps Italy, who will also go to the ballot box,” said Mr Hoppe. 

“In all four countries, populist parties are likely to gain support, which could undermine support for European cooperation and threaten further economic reforms. With last month’s shock announcement of snap elections to be held in Britain on June 8th, even our oldest trading partner’s political future is less certain.”

The latest Atradius Economic Research report released last month notes that the populist insurgency of the Netherlands, France, Germany, and Italy places their anti-European Union (EU), anti-immigration voices at the forefront of European politics.

“Even if these parties are not elected into leadership, they will make their voices heard loud and clear in the national parliaments,” Mr Hoppe said.

Among investors, this may trigger fears about the future of the euro and the EU. It may also cast doubts on whether countries with strong political fragmentation can still implement the reforms that are needed.

Extensive research

“This report is produced based on extensive research and insights from a range of experts in Europe,” said Mr Hoppe.

It gives Australian exporters an insight into the potentially changing political climate in Europe the year. The report highlights the key political players in the Netherlands, France, Germany, and Italy. 

“To ensure they make smart decisions, it is crucial local businesses are aware of potential issues and take steps to protect themselves in the event of late or non-payment,” said Mr Hoppe..

The April 2017 report highlights populist parties are also likely to oppose economic reforms more strongly than the mainstream parties – a concern especially for Italy and France.

Based on financial and economic figures, it is evident that Italy should be watched most closely, the Artradius report advises. Any sign of rising support for populist parties there may lead to a rise in yields, lower confidence, and delayed business investment impacting Australian businesses. 

Key markets

Mark Hoppe said: “Europe and particularly the countries of the Netherlands, France, Germany, Italy, and England remain key markets for Australia.

“Businesses must be aware of the changing political and economic conditions of each country they conduct business in or with.

“Australian organisations should protect themselves by extensively researching potential business partners and by taking out trade credit insurance, which can provide security to the business in the event of non-payment.”

The full report is available at: 

https://group.atradius.com/publications/political-uncertainty-europe-2017.html#

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