Businesses face an unprecedented “breadth of challenges” to their interests, broker Marsh warns in its annual Political Risk Map report.

Uncertainty over how the UK will leave the European Union and US-China trade tensions and military rivalry in the Asia-Pacific region are key dangers.

An “unintended military clash is possible” as Washington and Beijing ramp up their naval and air power in the region.

“Businesses have arguably never faced such a breadth of challenges as they do today,” Marsh says.

“From emerging economies to mature ones, business and trade are increasingly susceptible to uncertainty, with political risks posing a threat to business interests.”

The US-China trade spat could have many repercussions for the global economy, with export-dependent economies such as Germany in trouble if the dispute is not resolved amicably.

“Transition to a more multipolar world order of protectionism is likely to continue,” Marsh says. “Trade tariffs and geopolitical disputes with China could escalate [this year], bringing the risk of further Chinese retaliation and
US counter-retaliation.

“This uncertainty is compounded by Brexit, the exact nature and effects of which are still unclear.

“At the same time, there is a ‘fear factor’ rippling through the global economy and, in some cases, there has been a retrenchment of liberal values and a political shift to the right.”