INTRODUCTION Contributed by: Marcel Willems and Rowan Hamer, Fieldfisher
Uncertain times Other sources of uncertainty in the current juncture are geopolitical tensions and ESG. An example of the first is the ongoing war between Russia and Ukraine. Besides the human and political consequences, this war has a major impact on the global economy, in particular, for all countries that were dependent on Russia for energy. Rising energy prices and disrup - tions in the supply chain has meant that companies in energy-intensive sectors, such as industry and transport, saw their costs skyrocketing. In addition, non-Russian businesses were also affected by the sanctions imposed on Russian-(owned) businesses, for instance because of frozen assets. On the other hand, this war and the tensions that go with it have boosted especially the arms manufacturing industry globally. Beyond the war in Ukraine, escalating ten - sions in the Middle East further destabilised trade flows and energy routes and raised the risk of regional recessions. ESG puts additional strain on companies in the form of, for instance, extra administrative burdens (check - ing compliance by the entire supply chain and report - ing on measures taken) and the necessity to invest heavily in measures to safeguard the environment. Funding of such investments and, as a matter of fact, financing of operations in general, seems to be shifting strongly from the traditional banks to private institutions like hedge funds, private equity firms and business angels with entirely different approaches and requirements, adapting to which provides a challenge in itself. Furthermore, trade restrictions are also a source of uncertainty. Whether they are of a protectionist nature (import duties) or aim at limiting national security risks (prohibition of the use of foreign software), such poli - cies can have wide-reaching impacts on businesses and increase uncertainty across the board. In this context, what immediately stands out, in 2025, is the sweeping import tariffs introduced by the United States on key industrial and technological goods, triggering retaliatory measures and disrupting global supply chain developments which have increased insolvency risks for export-dependent businesses and added significant volatility to international trade. Due to unpredictable government behaviour, international
technical innovations can run into declining revenues. Rapid technological developments such as automa - tion and digital platforms are threatening traditional business models. Furthermore, artificial intelligence has become a structural force reshaping entire indus - tries. While offering efficiency gains, it has also led to widespread job displacement and the collapse of outdated business models, particularly in retail, logis - tics and customer service. This is also reflected by the increasing bankruptcy rates in the respective indus - tries. Companies that do invest in the latest innovations become increasingly dependent on technology, with its own cyber risks. How dependent companies have become on IT was illustrated by one of the largest IT outages in history, in July 2024, which disrupted businesses and governments around the world. The disruption was caused by a flawed update to a cloud- based security software of a global top cybersecurity company. The update triggered a malfunction which made some 8.5 million Microsoft Windows devices crash, led to disruptions of airlines, banks, broadcast - ers, hospitals and cash machines globally, and is said to have cost over USD10 billion. A last aspect of globalisation that should be men - tioned here is cryptocurrency. This literally borderless way of making payments causes legislatures and the judiciary many challenges while they are trying to come to grips with it. The ease with which the trust of the investing public may be abused (FTX), the grave consequences of (the possibility of) hacks (Mount Gox) and the danger of money laundering and financ - ing of terrorism with cryptocurrencies underline the need for caution, whereas at the same time cryptocur - rencies offer a unique worldwide speculation mecha - nism without involvement of any financial institution or regulated exchange. And yet, despite the risks and the warnings for it, the US has proven a big backer of stablecoins with the GENIUS Act (the Guiding and Establishing National Innovation for US Stablecoins Act), which may well lead the EU to follow this exam - ple shortly so as to not lag behind and lose ground to the dollar.
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