Donald Trump’s surprise election win in the US last week is likely to have global repercussions. Global bank BNP Paribas have narrowed the risks down to six key areas.
The Italian referendum
Italy’s constitutional referendum on December 4th could lead to major change for the relatively stable country. If Prime Minister Matteo Renzi loses the referendum and is forced to step down, it could pave the way for right-wing parties to enter government.
However, BNP Paribas sees the the immediate risk as ‘limited’, as a technocratic government would likely take Renzi’s place.
“Bigger risks loom in the 2018 election”, they said.
Dealing with political shock
Used as Europe is to relatively stable governments, analysts at BNP Paribas say “Europe is ill-equipped in terms of institutions to deal with political uncertainty”.
Which are the highest risk countries?
As populism and Euroscepticism begin to take hold in mainstream politics, which countries are most at risk?
“Particular hotspots for further populism are, in decreasing order: Italy, Netherlands, Austria, Hungary and Denmark,” the bank said.
What does it mean for the UK?
Analysts at BNP Paribas do not see a UK trade deal being one of Trump’s top priorities.
“The gains from a US deal will be relatively small compared to losses from Brexit,” they reiterated, blowing away hopes that Trump would be more amenable to a UK trade deal than Barack Obama.
In conclusion…
Going forward, European politics faces a time of change and possible instability. But what are the particular risks?
“The Italian referendum is an obvious one. There are political risks in the Dutch and French elections next year. The chances of outright populist governments are low, though the chances of them influencing discourse are higher,” they conclude.