Europe has recorded a sharper rise in political instability than any other region since 2020, according to our latest research. As it juggles intensifying geopolitical competition, trade disruptions, demographic pressures, the ongoing cost-of-living crisis and fiscal belt-tightening, our analysis signals that greater unpredictability and widening political divisions have the potential to become an entrenched feature of Europe’s political landscape, generating new costs and uncertainty for business.
These strains are already disrupting policymaking at both the national and EU level, slowing progress on industrial strategies, trade, defence, climate change, and immigration in the face of competing priorities. Heightened policy and regulatory volatility in the years ahead could also further shake the business environment at a time when much-needed economic growth is a priority and companies looking to invest need clarity from legislators in the face of a volatile global trade environment.
