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June 2017

D&B Country Insight Services - WorldWatch

Welcome to the latest WorldWatch.

This update of global developments is brought to you by the specialists of D&B’s Country Insight team. WorldWatch’s headline intelligence on trade credit risk, financial risk management, regulatory requirements and recommended trade terms, are explored in more detail in D&B’s unique journal, International Risk & Payment Review, and also on an individual basis in D&B Country Insight Snapshots, both of which are updated on a monthly basis.

After the surprising election result, which has produced a hung parliament, political and economic uncertainty in the UK has risen considerably. We predict that the formation of the next government will be time consuming, and given that the country will either be run by a minority government or by a coalition with a very slim majority, further elections cannot be ruled out. Given the backdrop of an already slowing economy (the UK posted the lowest real GDP growth of all 28 EU economies in Q1 2017) and a ticking Brexit clock, the challenges faced for businesses operating in the UK have only increased. We believe it’s highly unlikely that the first round of Brexit talks between the British government and the EU will go ahead as scheduled on 19/20 June, which means that companies will have to wait even longer to assess the impact of these negotiations on their business.

Our analysis indicates that uncertainty will remain high in the next 18 months, regardless of the eventual election outcome. We are maintaining our risk rating of DB2d and our ‘deteriorating’ risk outlook for the UK economy.  We predict that in the long run, the election result could make a ‘hard’ Brexit - which we believe would be harmful for the British economy - impossible. The best advice for businesses is to monitor the progress of negotiations, and use the latest data and analytics to assess risk and identify potential opportunities. A careful and measured approach to managing relationships with suppliers, customers, prospects and partners is key to navigating through these uncertain times.

Markus Kuger, Senior Economist, Dun & Bradstreet

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