Dun & Bradstreet has announced that it has downgraded the UK’s country risk rating and has revised its global economic outlook from ‘stable’ to ‘deteriorating’.
For the UK this means that. for the ﬁrst time it is considered a ‘medium risk’ country (and no longer a ‘low risk’ economy). On top of this, all areas of economic outlook in the country (including: Credit, Supply, Market and Political environment) are now deteriorating. This is important because the country risk rating helps organisations identify risk and opportunity around the world, informing investment, purchasing and business decision-making. A medium rating will deter prospective businesses from the UK.
The reason for this downgrade is due to the on-going risk of a no-deal Brexit, with no progress having been made in the negotiations between the UK and the EU and compromise seeming elusive. The UK’s risk rating has not changed since October 2016, when it was again downgraded over the risk of no-deal Brexit. The UK government’s decision to suspend parliament for ﬁve weeks from mid-September onwards has also impacted the rating, as it leaves little time for MPs to stop a no-deal Brexit.
The global economic outlook has changed amid concerns of political uncertainty, falling trade and policy exhaustion impacting business confidence. This is notable, as thousands of businesses across the world use this economic outlook to help them take advantage of cross-border risks and opportunities.
This decline has been made because the global economy faces a series of economic, political and security issues that will curtail growth in H2 2019 and into 2020. Regional powerhouses such as the US, China, Germany, Brazil, Mexico, South Africa, Nigeria and Saudi Arabia are all showing signs of slowing growth and, in some cases, the economies are contracting; which will undermine regional performances.
The situation is being worsened by the continuing fears of escalating trade wars, particularly between China and the US, but also as barriers to cross-border trade and investment continue to be raised.