February 21, 2017
Finsbury and Hering Schuppener's global political outlook 2017
Recent political shocks have shown that the broad public consensus in favour of the benefits of free trade, market economics, and even the primacy of the rule of law can no longer be taken for granted.
The rift between the perceived winners and losers of globalisation has grown wider over the last few years, and with it the cultural and political divide. Wage stagnation following the financial crisis has made this situation worse. There is a sense that the economy only works for a few at the top of our societies. Many people feel left behind as a result.
On top of that, social media is polarising opinion and there has been a collapse in trust in our institutions. For years, mainstream political parties have staunchly defended free enterprise. But politicians are responding to this new environment by seeking to intervene more, adopt more extreme positions and bypass the mainstream media.
Finsbury and Hering Schuppener’s global political outlook for 2017 delves into this further.
While the EU appears to face another year of existential crisis, 2017 could turn out to be a surprisingly positive year for the union.
On the surface of things, the European Union seems to be a patient in intensive care: Brexit; the risk of populist parties disrupting or even dismantling the entire European project; a US administration acting as a cheerleader for EU disintegration; plus the lingering risk of a return of the Euro crisis triggered by Greece and/or even Italy.
Despite these uncomfortable and real risks, there is a strong argument to be made that Europe could actually emerge much stronger from 2017 compared to its state when it entered it.
As Germany heads into a crucial election year, Europe’s economic powerhouse is facing new challenges.
For the last decade, Germany has been one of the bright spots among the world’s economies, achieving consistent growth, low unemployment and a strong fiscal balance sheet, earning the country a reputation as Europe’s economic and political centre of stability. However, as the country warms up for September’s Federal elections, the question is how much it must adapt to stay ahead in the face of a changing global environment.
As the national wounds caused by the Referendum continue to bleed, Prime Minister May must prepare the country for Brexit negotiations with the EU.
The United Kingdom has, for much of its recent history, sought to have a disproportionate impact on the world. On 23 June 2016 it inadvertently got its wish, with its decision to leave the European Union.
As power struggles heighten at the White House and several thousand political posts remain unfilled, President Trump continues to tick off a long list of policy goals in rapid-fire succession.
President Donald Trump has had a whirlwind beginning to his term, signing executive orders and issuing public policy pronouncements in rapid-fire succession. Although many of his actions have been greeted with concern, including by some Republicans in Congress, many steps have been consistent with his campaign pledges.
Following his much noticed defence of globalisation at Davos, President Xi is seeking to reconcile China’s domestic economic agenda with its international trade interests.
How times change. In 2016, China found itself caught in a highly politicised diplomatic wrangle about whether it would be granted market economy status fifteen years after its accession to the WTO. At the beginning of this year, China’s president Xi used his visit to the WEF in Davos to deliver a rigorous defence of free trade and globalisation, raising at-tendees’ hopes that China would step up to become a defender of the world’s open trade system at a time of growing protectionist threat.
Amid the uncertainties and geopolitical risks at the beginning of 2017, Japan is emerging as an unlikely bright spot.
Prime Minister Shinzo Abe’s successful visit to US president Trump, at which Abe managed to persuade Trump to reconfirm the close security relationship and raise hopes for a positive trade agenda, is the latest sign of Japan’s growing international visibility which Abe hopes will reach its climax at the 2020 Olympic Games in Tokyo.