Borders are back! Peter De Keyzer reveals what this will mean for deals

Growth Inc. managing partner and economist Peter De Keyzer explains how rising political tensions across the world has resulted in investors turning their eyes toward protectionism and security when looking at deals in Europe.

In today’s world, uncertainty reigns supreme, with economic forecasts becoming increasingly challenging amidst geopolitical tensions, shifting political landscapes, and the ongoing debate surrounding climate change.

“Almost half of the world’s population will vote for new leadership of their countries this year. Europe is trying to come up with a defence strategy against Russia, China and the US are taking over in terms of AI, and multiple sectors are seeing strategic autonomy – like technology, pharmaceuticals and energy. That’s an inordinate amount of uncertainty,” says Growth Inc. managing partner and economist Peter De Keyzer.

With a wealth of experience as a former chief economist for numerous financial institutions in Belgium, Peter explains that one thing that has become abundantly clear amidst all of this is: borders are back.

He says, “When the Berlin wall fell, we experienced almost 30 years of trade liberalisation, the integration of former Eastern European countries, and the introduction of the euro. Borders seemed to be relics of the past and regulation was converging to something we could all agree upon.”

But right now, borders are being erected again, Peter says; “literally even – between Hungary and Serbia or Mexico and the US to stop refugees, the rest of the world putting sanctions on Russia, or even limiting the export of high-value electronics to China.”

He explains that, given how powerful China is now economically, how far Russia has already gone, and the potential election outcomes in November with Donald Trump running for presidency again, the world is in for a multi-year period of increased protectionism.

The impact of protectionism

As a result of these borders, Peter says, countries will be forced to go for redundancy rather than efficiency. This means replicating existing factories because countries won’t want to depend on imports from other countries. “Globalisation was very efficient but seemed to lack legitimacy for a lot of people. You had access to the cheapest goods by buying from the lowest bidder. But they came from factories on the other end of the world. Deglobalisation will create more legitimacy for people as they will know that what they are using is coming from their own country. It might seem that countries get stronger independently. But this is only temporary. Over time protectionism is bad for innovation and quality.”

He explains it like growing a plant in a greenhouse: “If you leave it in the greenhouse, it will thrive for years, but as soon as you take it out of the greenhouse, it might die because it’s never been exposed to the outside.”Another immediate consequence of higher protectionism is higher inflation, because it means governments won’t allow consumers to buy the cheapest goods from the lowest bidder elsewhere in the world.

“That’s why globalisation is efficient, and why borders are not. It makes strong, resilient companies,” Peter says.

He adds that, as a believer of openness and free markets, it pains him to see what’s happening right now, but he believes economics is not the only thing that’s important anymore. “The world is not simply an entity you can optimise for efficiency. People want to feel at home and protected, so security becomes important.”

Peter predicts that investment in defence will increase going forward. “I think national interests will become much more important once again. Market forces – the best product at the best prices – will no longer be dominant. Governments – selecting the companies and industries that should win – will be”
Sectors that can help make Europe autonomous with regards to energy are going to be very important in this new landscape, as it currently imports most of the resources it needs for its power needs. “This is an opportunity to turn our independence of fossil fuels into a strategic asset.. If we stop importing fossil fuels, we’ll be able to invest that money back into generating cleaner energy in Europe. This also frees up capital for investments into AI, housing, and factories, for example.”


Growth Inc Peter De Keyzer
Peter De Keyzer from Growth Inc.


As globalisation gives way to fragmentation, companies must carefully weigh the risks and rewards of international partnerships against the backdrop of geopolitical tensions. Peter urges European dealmakers to think carefully about who they choose to partner with. “If you decide to incubate with a Chinese counterpart, sooner or later regulations in the country might tell you that it’s not a good idea, or the USA might tell you that your business is no longer welcome in their country because of your affiliations with China.”

He explains that we are coming out of an era in which globalisation was the norm and the world looked like one big friendly place. Now, the impact of geopolitics on your supply chain and production processes, as well as your organisation’s reputation, will become very important.

“The world is a lot less open than it was a couple of years ago. Like near-shoring or friend-shoring, where we tried to establish supply chains to countries that think and operate similarly, you’ll find more companies partnering with other companies that think and operate alike. European organisations reinforcing ties with their European counterparts will be a good idea,” he adds.

Belgium is a relatively small and harmless geopolitical player in Europe, if you compare it to the UK and France, for example. This makes the country a great investment choice when you’re looking for opportunities that are geopolitically neutral, Peter says. “We have a lot of European and international institutions in Brussels. The European Parliament and Commission, as well as the NATO headquarters are also located in the country.”

As far as transportation is concerned, Belgium has the biggest port in Europe, the world’s second petro-chemical cluster after Houston, a gas terminal at the coastline and a big offshore windmill park in the North Sea. “These are some of the things the European investment market will want to focus on going forward: defence and alternative energy – which Belgium plays a central role in,” Peter explains.

Forget forecasting, use foresight

For M&A specialists in Belgium and beyond, navigating this shifting landscape requires a delicate balance of risk assessment and strategic foresight. “Forecasting is something of the past,” Peter says. “Strategies will all be scenario-based, dependent on government policies and unexpected outcomes going forward.”

He explains that the world will become a lot more unpredictable. “Since 2020, we’ve had a pandemic, and a global recession, followed by a global vaccination and recovery. Then came the invasion of the Ukraine, an increase in the energy crisis, the highest inflation and sharpest interest rate hikes of the past four decades, and a war in the Middle East. And we’re not even four years into the period.”

Peter advises leaders to prepare themselves, and their organisations, for widely varying outcomes, as this will become their most valuable asset. “We’ve seen these momentous events happening over the last couple of years, we will see echo events months, quarters and years into the future.

“Foresighting is going to be more useful than forecasting,” he concludes.

Read also: M&A is getting more complex: this is how you integrate all various aspects

Related articles