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The bomb explosions in Brussels on the 22nd March 2016 are another example of the heightened tensions which have emerged across developed markets since 2015. Since the global financial crisis of 2008-2009 businesses and investors have generally become more risk averse but such events highlight that it is not just economic or banking risks that can impact business environments. Western economies are no longer immune from geopolitical tensions that have long destabilised the Middle East and African regions.
Prior to the events in Belgium in 2016, the country ranked better in the Global Terrorism Index 2015 compared to major Western European economies such as the UK or France. However, the incidence of events that have taken place across the region will worsen the scores in this index or other measurements of stability and violence. Outside of Turkey, the UK had the worst ranking in Western Europe in the Global Terrorism Index 2015.
Global Terrorism Ranking for Select Western European Economies: 2015
Source: Institute for Economics and Peace
Note: The Global Terrorism Index measures the impact of terrorism in countries. The four factors counted in each country’s yearly score, are: total number of terrorist incidents; total number of fatalities caused by terrorists; total number of injuries caused by terrorists; a measure of the total property damage from terrorist incidents. Ranking is based on the 2015 report out of 162 countries. The higher number indicates a better ranking in the index
All governments across Western Europe will now be on full alert for further attacks and the timing coincides with the fact that 2016 already started with a great deal of uncertainty for the global economy. Developed markets are in the grip of a migrant crisis, financial market instability and uncertainty surrounding the US election and Brexit. Euromonitor International expects the global economy to grow moderately by 3.3% in real terms in 2016, a downward revision from our January forecast of 3.4% while eurozone growth has been revised to 1.6% from 1.7%. Such events will further weigh on investor and business sentiment. Yet, the unpredictability of attacks will not be enough to deter business activity in Western European countries (five Western Europe countries rank amongst the top 10 easiest places to do business in 2016 out of 189 economies, according to the World Bank) but it will mean that governments and business look to increase spending on domestic security, especially in major cities, as vigilance becomes the “new normal”.