Pessimism among global businesses has risen sharply in the third quarter of the year as US-China trade tensions, the slowing Eurozone economy, and the rising chances of a no-deal Brexit spook firms.
The quarterly global risk survey from Oxford Economics, released today, showed that 19 per cent of companies think a deterioration in the global economy is highly likely, compared to seven per cent in the second quarter.
Oxford Economics said 56 per cent of companies now think a trade war hitting global growth is the top risk to the economy, up from around 25 per cent in the second quarter.
The survey, which spoke to over 200 businesses which employ around 5m people, was carried out before US President Donald Trump slapped 10 per cent tariffs on $300bn on Chinese goods in a dramatic escalation of the trade conflict between the two sides.
Nevertheless, around three-fifths of respondents cited protectionism as a very significant risk to the global economy over the next five years, up from just below half in the previous quarter.
Firms were also troubled by limp growth in the Eurozone, which has suffered under trade tensions, Brexit and weak demand from China. It was the second most cited risk behind trade tensions, with 40 per cent of firms naming it as a top three risk to the global economy.
The survey showed concerns over Brexit also rose in the third quarter as Boris Johnson took over from Theresa May as UK prime minister. He has ordered his government to ramp up preparations for leaving the European Union without a deal.
The share of respondents viewing a no-deal Brexit as a top three risk rose from 19 per cent in the period prior to Boris Johnson taking office to 30 per cent in the third quarter.
“Climate change also featured prominently in respondents’ comments, as in the previous survey,” said Jamie Thompson of Oxford Economics.
“But concerns over an asset price plunge – for example, on the back of the withdrawal of unconventional policies – have fallen on the quarter.”
“This may be related to rising expectations of policy loosening by major central banks.”