Impact on the European Economy of a Downturn in Emerging Asian Economies and the UK's Withdrawal from the EU

「Overseas, US trade pressure became increasingly concrete from the beginning of 2026, and changes in the export environment resulting from additional tariff measures became more pronounced. As a result, uncertainty surrounding the outlook for the global economy has risen to unprecedented levels.」

「The Japanese economy during the fiscal year remained subject to an uncertain external environment, including persistent geopolitical risks and renewed trade pressure from the new US administration.」

「At the same time, interest is growing in advanced fields such as AI and environmental technologies, and related companies are increasing their research and development investment. In regional economies, the issue of business succession at small and medium-sized companies is becoming more serious, and the increase in profitable business closures is affecting local communities. Internationally, Trump tariffs and uncertainty surrounding the situation in the Middle East are affecting export industries, although expectations are also emerging that the use of free trade agreements, including RCEP, will improve export competitiveness.」

「At the same time, companies have been unable to pass higher costs on to prices, and following the Bank of Japan's decision to raise interest rates, major domestic banks have increasingly moved to raise their short-term prime rates. If this is compounded by higher corporate lending rates, a slowdown in overseas economies, and supply constraints resulting from labor shortages, the difficult conditions facing small and medium-sized companies could persist for an extended period.」

「At the same time, companies have been unable to pass higher costs on to prices, and following the Bank of Japan's decision to raise interest rates, major domestic banks have increasingly moved to raise their short-term prime rates. If this is compounded by higher corporate lending rates, a slowdown in overseas economies, and supply constraints resulting from labor shortages, the difficult conditions facing small and medium-sized companies could persist for an extended period.」

「During the third quarter of the current consolidated cumulative period, many sole proprietors and mid-sized and small companies continued to face an uncertain outlook due to rising prices, concerns about the situation in the Middle East, and recessions in overseas economies.」

「At the same time, as monetary tightening continued in the US and Europe, the economic outlook remained uncertain due to the impact of downturns in overseas economies, rising prices including food and energy prices, and volatility in financial and capital markets.」

「At the same time, the downturn in overseas economies resulting from global monetary tightening and other factors poses a downside risk to the domestic economy, while the economic outlook remains uncertain due to inflation resulting from the situation in Ukraine, supply-side constraints, and volatility in financial and capital markets.」

「During the third quarter of the current consolidated cumulative period, the economy was gradually moving toward recovery as the effects of various government policies and the recovery in the movement of people accompanying the easing of restrictions on activity took hold, despite the continued impact of COVID-19. At the same time, the economic outlook remained uncertain due to rising crude oil and raw material prices resulting from the situation in Ukraine and rising prices caused by the rapid depreciation of the yen as the interest rate differential between Japan and the US widened.」

「At the same time, the downturn in overseas economies resulting from global monetary tightening and other factors poses a downside risk to the domestic economy, and continued close attention is required regarding volatility in financial and capital markets and rising prices.」

「However, the number of infections began increasing again in July, and the situation remained uncertain regarding the containment of the infection. Close attention is also required regarding the impact of international developments on the domestic economy, including soaring energy and raw material prices against the backdrop of the sharp depreciation of the yen and the situation in Ukraine.」

「However, the situation is expected to remain uncertain due to the global semiconductor shortage, higher resource prices resulting from Russia's invasion of Ukraine, and supply chain disruptions.」

「During the third quarter of the current consolidated cumulative period, Japan's economy remained constrained by the impact of COVID-19, but socioeconomic activity was beginning to recover following the lifting of the state of emergency and priority preventive measures and progress in vaccinations. However, the outlook remained uncertain due to the impact of semiconductor shortages on industries, inflation centered on crude oil prices, and the emergence of new variants.」

「The economy is expected to recover as economic activity gains momentum following the lifting of the state of emergency and the promotion of vaccinations, supported by the effects of various policies and improvements in overseas economies. However, close attention is required to infection trends, the rising downside risk resulting from factors such as semiconductor supply shortages, and volatility in financial and capital markets.」

「During the first quarter of the current consolidated cumulative period, corporate earnings and employment conditions remained challenging as COVID-19 resurged, with states of emergency and priority preventive measures implemented intermittently in some regions.」

「The economy is expected to recover as socioeconomic activity is increased while measures are taken to prevent the spread of infection, supported by the effects of various policies, improvements in overseas economies, and regulatory reform and investment aimed at new goals such as digital transformation and the creation of a greener society. However, the need to monitor the risk of renewed infection and the impact of infection trends on domestic and overseas economies continues.」

「During the third quarter of the current consolidated cumulative period, signs of recovery were seen in some areas, particularly personal consumption and public investment, and a gradual economic recovery had been expected. However, COVID-19 spread nationwide again toward year-end, and corporate earnings and employment conditions remained challenging.」

「During the second quarter of the current consolidated cumulative period, economic activity remained constrained by the impact of COVID-19, and corporate earnings and employment conditions continued to be challenging. Although the economy is expected to recover as socioeconomic activity is gradually restored and various policies take effect, continued attention is required regarding the impact of trends in infections in Japan and overseas and volatility in financial and capital markets.」

「During the first quarter of the current consolidated cumulative period, the Japanese economy remained in an extremely severe condition, as requests to suspend business operations and strengthened calls for people to refrain from going out following the declaration of a state of emergency due to the spread of COVID-19 led to deteriorating corporate earnings and employment conditions and a decline in personal consumption.」

「However, the situation became extremely uncertain due to concerns about the impact of the global spread of COVID-19 on domestic and overseas economic activity and volatility in financial and capital markets. Corporate business conditions are expected to remain challenging for the time being.」

「Amid growing uncertainty surrounding the international outlook, including the prolonged US-China trade friction, the UK's EU withdrawal issue, and the unstable situation in the Middle East, capital investment and exports declined. In Japan, consumption also temporarily stagnated due to the consumption tax increase and successive natural disasters, and the economic outlook remained uncertain.」

「At the same time, the economy faced risk factors including the impact of the consumption tax rate increase on domestic consumption, economic slowdowns in Asian countries including China, and heightened tensions in the Middle East, and the economic outlook remained uncertain.」

「At the same time, the economic outlook remains uncertain due to factors including the impact of developments in trade issues on the global economy, uncertainty surrounding the outlook for the Chinese economy and overseas economies and policies, and the impact of volatility in financial and capital markets.」

「Although the domestic economy is on a gradual recovery path, supported by solid corporate earnings and improving employment and income conditions, the outlook remains uncertain due to US-China trade friction, US protectionist trade policies, and the impact of the UK's EU withdrawal issue. The competitive environment facing customers, namely mid-sized and small companies and sole proprietors, is becoming increasingly challenging due to the impact of exchange rate fluctuations on orders and cash flow, as well as the pass-through of higher labor and transportation costs into prices.」

「However, the economic outlook is expected to remain uncertain due to factors including uncertainty surrounding the UK's EU withdrawal negotiations, the impact of US-China trade issues on the global economy, and volatility in financial and capital markets, such as a global stock market decline.」

「At the same time, concerns are growing overseas about the impact of US-China trade issues on the global economy, while in Japan the economic outlook remains uncertain due to infrastructure outages and supply chain disruptions caused by successive natural disasters such as typhoons and earthquakes.」

「At the same time, concerns over trade friction resulting from US protectionist policies and risks such as Middle East crude oil conditions remain, and the economic outlook continues to be uncertain.」

「However, private consumption had not recovered sufficiently, and the economic outlook remained uncertain because of the rising geopolitical risks in various countries.」

「Overseas, the economic outlook remains uncertain because of heightened concern about the situation in North Korea and growing uncertainty surrounding the operation of the U.S. administration.」

「During the first quarter of the current fiscal year, Japan’s economy continued on a gradual recovery path against a backdrop of improving corporate earnings and employment conditions, although the outlook remained uncertain because of the impact of U.S. policy developments and the political situation in Europe.」

「However, uncertainty about the outlook continued because of growing uncertainty surrounding the policies of the new U.S. administration, concerns about policy developments associated with the United Kingdom’s decision on its Brexit policy, and the slowdown in China’s economy.」

「During the first nine months of the current consolidated fiscal year, Japan’s economy continued on a gradual recovery path, supported by improvements in corporate earnings and employment and income conditions. However, the global economy remained uncertain because of volatility arising from political and economic developments, including slower growth in China, an economic slowdown in emerging markets, the United Kingdom’s Brexit issue, and the sharp post-U.S. presidential election depreciation of the yen and rise in stock prices.」

「During the first six months of the current consolidated fiscal year, Japan’s economy remained generally uncertain despite a gradual recovery in private consumption resulting from improvements in employment conditions and the income environment, owing to the appreciation of the yen, the Bank of Japan’s negative interest-rate policy and downside risks to the global economy resulting from slower growth in emerging Asian economies.」

「Meanwhile, the outlook remains uncertain because of downside risks in emerging Asian economies, including China, and the impact on the European economy of the United Kingdom’s decision to leave the EU.」