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CONCERNS ABOUT THE ECONOMY INTENSIFY
oVERALL the macroeconomic environment continues to weaken , however there is light at the end of the tunnel . The principal culprit for this slowdown is the continuing crisis in the Eurozone , which is dragging down economic growth everywhere , including rapid-growth economies , such as China , India and Brazil .
With large amounts of sovereign debt maturing in 2012 , and with the recent downgrades of France and Austria undermining fragile confidence in financial markets , policy-makers in the region will remain under intense pressure .
The prospect that the Eurozone will fall into recession in 2013 looks increasingly likely . Growing concern in the banking sector about exposure to sovereign debt is also causing a tightening of lending conditions , which could worsen dramatically if the situation in the Eurozone deteriorates further .
2012 was also a year of major political change , which , prematurely , added to the sense of uncertainty . The US and France both faced elections and China sees the handover of the presidency and prime- minister ship to a new guard in 2013 . Government actions and policy responses Since the financial crisis , government has played an increasingly active role in business . In many developed countries , governments have stepped in to take over ailing financial services institutions and protect them from bankruptcy . Regulation has become more intrusive , and some governments have become more active in setting and determining industrial policy . Among a recent survey ’ s respondents , 61 % say that the risk of a continuing expansion of government ’ s role has increased as a result of recent economic turbulence . Government influence on business has also increased in some rapid-growth markets .
In China , for example , state-owned enterprises ( SOEs ) have grown significantly in stature and now number among some of the world ’ s largest companies . The Chinese Government is routinely accused of granting preferential treatment to these SOEs , including cheap loans and regulation that favors them over private companies .
With public finances under severe strain , many countries are taking a much tougher line on tax enforcement . Tax authorities are undertaking more frequent and aggressive audits , particularly of crossborder transactions , and are sharing tax information with administrations in other countries . In a recent survey , some 67 % of companies worldwide reported that they are experiencing heightened risk or uncertainty around tax legislation .