EU faces range of challenges that will shake unity in 2019

The EU will face both internal and external challenges next year from issues such as populism, stand-offs with member states, elections and Brexit, which will continue to “shake the bloc’s unity”, according to Control Risks’ RiskMap 2019. The company’s annual forecast of political and security risk warns that diverging opinions in the EU on major issues such as migration and the desired level of integration will cause problems in 2019. It adds that confrontation between the EU and national governments in Poland, Hungary and Italy will threaten unity. Control Risks says the continuing growth of populism, aided by increasing public dissatisfaction with the traditional political establishment, is likely to be reflected in the European Parliament elections in May. “A shift in the parliamentary composition and/or majority would inevitably drive changes in the policy outlook for the EU as a whole,” commented Aleksandra Szylkiewicz, an associate analyst covering the EU for Control Risks. Brexit is also a risk for companies operating on both sides of the English Channel in 2019, as they face an uncertain operating environment. The UK's departure from the EU will inevitably impact the trade balances of EU countries, as well as businesses operating across the channel, said Ms Szylkiewicz. Continuing uncertainty about the post-Brexit trading relationship has left companies wondering how to prepare for the unpredictable, she continued. According to Ms Szylkiewicz, regardless of the outcome of Brexit negotiations, interdependence between the UK and EU border infrastructure means delays are likely even beyond the transition period, which is expected to last until the end of 2020. “Even if the UK reaches a deal with the EU, staffing levels and infrastructure required to smooth the process of goods across the UK/EU border after Brexit will be inadequate before the end of the transition period. Negative repercussions will be particularly felt at border checkpoints and ports that process a large amount of goods imported from and exported to the UK. European ports will face capacity challenges when handling, and dealing with, customs procedures, which could lead to port congestion and loading delays,” she said as RiskMap 2019 was launched. Control Risks also expects to see higher costs and more red tape for freight forwarders and operators, as well as for businesses using their services. “Many companies across a variety of sectors will require additional licences and authorisations just to continue business as usual after Brexit. We also expect to see additional costs to keep things running,” said Ms Szylkiewicz. On a more positive note for EU member states, Brexit could also mean certain countries become more viable investment destinations at the expense of the UK. “This could present an opportunity, notably for European businesses that can present themselves as viable alternatives and attract investment and business away from the UK to the EU,” said Ms Szylkiewicz. Externally, trans-Atlantic tariffs will remain a thorn in the side of the EU’s trade relationship with the US next year, she continued. But Ms Szylkiewicz also noted that new opportunities will arise following the likely implementation of trade deals with Asian countries, including Japan, Vietnam and Singapore.

EU faces range of challenges that will shake unity in 2019

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