Brexit and weak government make the UK 'one of the biggest risks of 2018', according to report

Uncertainty over Brexit and the unstable Conservative government make the UK one of 2018’s great concerns, the world’s largest political risk consultancy has said.

The Eurasia Group named 10 risks for 2018 – from diplomatic rows to distrust in government – listing the UK in its annual report of the political risks that are most likely to play out over the course of the year

Publishing the forecast, it said: “Let’s be honest, 2018 doesn’t feel good.

“Yes, markets are soaring and the economy isn’t bad, but citizens are divided. Governments aren’t doing much governing. And the global order is unraveling.

“The scale of the world’s political challenges is daunting. Liberal democracies have less legitimacy than at any time since World War II, and most of their structural problems don’t appear fixable. Today’s strongest leaders show little interest in civil society or common values.”

It added that “the decline of US influence in the world will accelerate in 2018”.

“The mix of soft power and economic and political liberalism faces a crisis of credibility. With little sense of strategic direction from the Trump White House, US global power, used too aggressively by George W Bush, then too timidly by Barack Obama, is sputtering to a stall,” it said.

10. Africa’s security
The Eurasia Group said that “negative spillover from Africa’s unstable periphery will increasingly spoil the continent’s success stories”, naming it as one of the top 10 political risks for 2018. In particular, the Democratic Republic of Congo faces a huge humanitarian crisis, while the likes of Libya and Somalia remain unstable.

9. Identity politics in Southern Asia
According to the reports, Southern Asia identity politics threatens the future of “these increasingly prosperous regions”. It says this is “creating unexpected challenges for economic planners and foreign investors.” It identifies Islamism, racism toward Chinese and other minorities and Indian nationalism as particular risks.

8. United Kingdom
Once seen as one of Europe’s most stable countries, the United Kingdom now makes Eurasia Group’s risks report. It says its “troubles will come from both acrimonious Brexit negotiations and difficult domestic politics”, which include the Conservatives’ minority government.

7. Protectionism 2.0
The report describes how antiestablishment movements have “forced policymakers to shift toward a more mercantilist approach to global economic competition”. It says that this trend will create new trade risks for 2018, putting it bluntly: “Walls are going up.”

6. The erosion of institutions
The Eurasia Group notes that, across the developed world, trust in technocratic and bureaucratic institutions has declined steeply. This is true of the US, in particular, where Donald Trump has waged a war against the press and state.

5. US-Iran relationship
Trump has taken the surprise step of attacking Iran following a thawing of tensions between the countries under Obama. The report warns that if the if the nuclear agreement (which Trump has criticised) fail the world will enter a “new and dangerous dynamic”.

4. Mexico
The reports says that this year will be a defining moment for Mexico’s longer-term outlook. It adds that this will depend on the outcome of North American Free Trade Agreement (Nafta) renegotiation and its summer elections.

3. Global tech cold wave
“The latest wave of innovation takes place at a time of broader tensions within the internet and technology spaces that will play an important role in 2018”, the report says. It describes the tech race as “messy”.

2. Accidents
The report warns that it’s impossible to ignore the risk of a major crisis in 2018, particular in countries such as North Korea and Donald Trump’s US, which could easily stumble into war. It adds that the likelihood of geopolitical accidents has risen significantly, a trend that will continue.

1. China loves a vaccum
China had avoided talk of global leadership until last year, the report claims. Now, it says, “China is setting international standards with less resistance than ever before.” It says Trump’s ‘America First’ policy and Europe’s own distractions mean that China face less scrutiny.