Europe tops political risks in global ‘electoral supercycle’ - Verisk
Europe could be the political risk hotbed of 2024, with volatility in government profiles leading a variety of SRCC-style risks, analysts at political-risk modeller Verisk Maplecroft have claimed.
Europe is the “worst performing region globally” on Maplecroft’s Q1 2024 predictive measure for potential changes in government profile, despite a global calendar rife with elections across the globe.
The likely upshot: an electoral swing to the right could deliver a “less progressive, more Eurosceptic EU.” Far-right parties could end up headlining or propping up one-third of EU member states by year-end, Maplecroft authors claimed.
The UK could make the rare move the other way, albeit in anything but a sign of political stability. While the change will be driven by “significant deterioration” of several of Maplecroft's economic indices, including for economic growth, borrowing costs, and the tax burden, those same factors ensure the pending Labour government “will be holding a weak fiscal hand”.
The EU should have had more competition for the title of most instability. In 2024, at least 64 countries will hold elections worldwide, putting nearly half of the world’s population at the polls in an “unprecedented electoral Supercycle”. The list includes India, Indonesia and the United States, the world’s three largest democracies.
The US election has watershed written all over it. Maplecroft said the outcome will determine US foreign policy and the geopolitical outlook from 2025 onwards. “Besides security and trade impacts, how the electoral process in the US unfolds will be crucial in fuelling or stalling global democratic erosion,” authors wrote.
In Europe, civil unrest readings from the Maplecroft models appear dire. The 2024-Q1 civil unrest index flashes “very high risk” for Spain, France, Belgium, Germany, Italy, UK and Poland. Not a single European nation sported a medium or low risk reading.
Farmer protests took a headline call-out for their potential for business interruption and policy uncertainty, having led the impact on the civil unrest index for such major names as Germany, France, Italy, Poland and Belgium. Farmer grievances may be a good match for far-right positioning. Environmental and biodiversity policies may fall victim to the conflict, authors noted.
In a similar fashion, 27 countries suffered declining ESG ratings from Maplecroft, versus just 11 improvers and six with unchanged readings. Notable fallers are Germany, Belgium, Hungary, and Poland. Analysts cite “continuing difficulties of reconciling energy security needs with the energy transition.”
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