5 Geopolitical Risks UK Businesses May Face in 2025

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2025 is set to pose a number of challenges to UK businesses, many of which stem from geopolitical causes that originate elsewhere in the world. Let’s consider a few of the more significant of these.

Escalating Global Trade Tensions

The second election of Donald Trump in the United States has caused markets around the world to brace for a trade war. The president-elect’s promise to impose a 25% tax on imports from Canada and Mexico, and much higher levies on goods coming in from China, could mean other countries follow suit with retaliatory tariffs of their own.

The UK’s Business Secretary, Jonathan Reynolds, has told a parliamentary committee that any such trade war would ‘hurt our companies’, as well as ‘consumers in whatever country are being asked to pay those tariffs’.

Economic Shifts in the Indo-Pacific Region

The Chinese Communist Party’s politburo recently announced that it was changing its monetary policy from ‘moderately loose’ to ‘prudent’. This has helped to push up the price of stocks and bonds in the country. Other regional sources of uncertainty, like the fate of Taiwan, might be dependent on how the Trump administration positions itself. The Prime Minister’s recent visit to China should underline the importance of this region to the international fortunes of UK businesses.

Rising Protectionism and Regulatory Changes

Major regulatory changes, and the rise of protectionist rules designed to privilege businesses in their host countries, might make it more difficult for UK-based businesses to operate overseas. Other regulatory risks stem from climate change, and the measures being taken to mitigate its effects. For example, the European Union has made a 55% reduction in emissions a legal obligation, and set out a number of laws to make it happen.

Adapting to these changes may require seeking the advice of international risk management professionals to align with new regulations and minimise disruption.

Political Instability and Civil Unrest

Instability and unrest are major risks, especially in the wake of Middle East events. These events, and others like them, may trigger cascading political effects that can be difficult to predict. Political violence and political risk have been identified as the two most common kinds of risk, in a recent report by Maplecroft.

Cybersecurity Threats Amid Geopolitical Conflicts

Rising geopolitical tensions, along with the availability of increasingly sophisticated AI-driven cybercrime techniques, mean that UK businesses are exposed to cybersecurity threats to an unprecedented extent. Battling these threats means equipping employees with the skills they need to deal with phishing attacks. Cybercrime can impose a legal risk, particularly where customer data is compromised. Thus, it’s better for companies – and governments – to be proactive in dealing with it.