Credit Risk Guide – Best of the Rest of Western Europe (A 24 Part Guide)

Following on from the series that covered that Nordic Countries, the Balearic region and the UK, we now turn our attention to the Risk Assessment of the different countries dotted around Western Europe.  Starting from the upper most point of Western Europe, this Article starts off with Iceland, and makes its way down to Italy.

Greece, Cyprus and Turkey will be covered in a separate issue.

(Risk Ratings in understanding Risky Customers are between 1 and 5, with 1 being the lowest and 5 being the highest.)



One must not forget that one of the earliest casulaties of the recent global recession was that of Iceland.  Back in 2008, the government with the aid of the EU and the IMF had to bail out all of the major banks in a bit to save the economy from total collapse.  Prior to that Iceland was like that of its Nordic neighbours perceived as being that of a stable economy.

Despite the injection of cash, there had been a large emigration of people from its economy and although efforts are concentrated in trying to get the economy back on form, it is a far cry from what Iceland was perceived to be at before the crisis.

In terms of a credit risk and legal issue, there are relatively few business deals conducted with the Icelandic people, but it is one to watch and request that if any business is transacted with this small country, then to exercise at least a medium term deposit.

Given the above, an average Credit Risk Rating would need to be atributed to this Country.

Risk Rating= 3


Split into Southern Ireland (independent Country) and Northern Ireland (part of the UK), the political atmosphere has been critical up until the last decade or so, what with the disbandment of the terrorist organisation (Irish Republic Army) the IRA causing dissident activity to fight for their own rights.  This in turn had caused a lot off difficulty on a economic and legal scale.  As per the recent Article dealing with the UK, Northern Ireland would generally have its credit rating and legal activity in alignment with the UK.

However, we concentrate on Southern Ireland and how their Credit Rating and Legal Activity is fared.

AIB, Ulster Bank, Guinness are just some of the famous names to come out of Ireland.  A bit like that of the UK, and Iceland, at one time a special division was set up by the government of Ireland, in light of tackling the global recession that hit many an Irish bank, including that of AIB.  As mentioned a number of days ago, Ireland obtained a bailout package for around €85bn from the EU/IMF to dedicate clearing down its deficit.

In terms of legal activity in this area.  Commission rates for legal action amount to 20%.  Courts are archaic and slow if you wish to enter judgment in your own jurisdiction and finding your debtors or taking action in general can take many months, if not years.  A Credit Risk Rating for Ireland is average where like that of more established companies who can afford to pay you, the remaining is lost with nowhere to go.  If you experience new business with a company owner, it would be better to do a stringent credit check and if necessary obtain a medium sized deposit contribution up front.

However commentators recognise that the economy is on the up, but still a conservative rating needs to given, considering its bailout back in 2011

Risk Rating = 3


An economy full of rich brands, from the clothing, perfumery, luxury lifestyle food and drink sectors, such as Cerruti, Dom Perignon, Citroen, Givenchy, Hygena, Louis Vitton, Moet & Chandon, Renault and many other names show that the French has a rich heritage when it comes to business and spinning out famous brands.

Although a strong power within mainland Europe, it has struggled due to its government debt that it has accrued, and there had been some unrest a number of years ago due to the austerity measures put in place.  Recently commentators echoed a downgrading in its Credit Rating.

From a legal standing.  usually where legal action is mentioned, most French companies are keen to avoid this and will enter into a payment plan with you if they have debt outstanding with you.  From a credit rating point of view, most French companies fare better than most and has a slightly credit rating than that of the UK.

Risk Rating= 2


Stella Artois and other breweries are most notable in this country rich in luxury brands.

Belgium has fared better in handling its debt situation better than most and with that in mind Belgium has an above average credit rating, especially with the onslaught of a new cabinet setting up to take precedence.

Generally this country and those who are domociled within it are willing to pay as per their credit rating.  Apart from the few that are professional debtors, the majority of this economy will clear down any debts that may become due. Commission rates for legal action conjure around the 20-25% mark.

This could change as they have an abundance of high public debt, but from my perspective, they have cleared all debts as presented to them in a timely manner and without the need for further legal action.

Risk Rating = 2


A powerful economy, second to that of Germany and surrounding countries in being in control of its finances.

Well known brands such as Heineken, Unilever, Tom Tom and ING bank have heralded from The Netherlands. However, it has had to suffer the issues experienced by other European counterparts, especially as the single currency has slowed it’s prospects in growing.

Generally speaking the Dutch are clued on and represent an average credit rating.

Legal action if at all presented will result in the majority of debts being paid.

In summary thereof an above risk rating is awarded to this Country.

Risk Rating = 2


Geographically a small country, but financially one of the world’s foremost wealthiest countries, with only Qatar and Middle East countries ahead of it.

A tax haven and a country which is financially capable having in excess of €150bn at its disposal.

A high credit rating and a country where legal action against outsiders are unheard off. Many Internet companies such as Skype and Amazon have moved their European Headquarters there due to the tax benefits that it offers.

Risk Rating = 1.


Addidas, BMW, Continental, Jägermeister, Mercedes, Nivea, Porsche, Siemens, VW.

What do all the above have in common, well all are synonymous with well known heritage straight from Germany.

Germans have a logical way of doing business and are thorough in ensuring that all off their debts are paid on time and that legal action is avoided.

When credit checking is utilised, all participants are requested to register why they need to seek information.

If all other countries did this on a compulsory basis, this would result in better communication in doing business effectively and get better credit risk ratings recorded.

In my experience, the only time I have had a debt go bad on me in Germany is when they entered into formal insolvency proceedings, otherwise they have the means to discharge their debts as they fall due.

Risk Rating = 1


Not as powerful as its German neighbour in the economic stakes, Austria is still an above average economy, with Germany being one of its bigger markets dependent on banking and other financial related economies.  However, recently with the current ongoing crisis under way in Ukraine, this has hit the focal point for exports in Austria.

Unfortunately, Austria needs to bear the brunt along that with the rest of the powerful countries in Europe to balance its budget, and may therefore be subject to austerity cuts which are likely to exist until 2016, when its likely to balance its budget.

Legal action is not necessarily needed as doing business as the majority of Austrian businesses either pay up front, or within an early stage period, a bit like that of Germany.  It however remains to be seen how the economy grows now with other external factors affecting the country.

Risk Rating = 2


Like that of Luxembourg, and the Swiss people opting to stay out of the EU, as seen this Country turn on its fortunes and become a haven for the rich, given its tax benefits and likewise has lifted its wealth.

Legal action and Credit Ratings therefore are amongst its highest and unlikely to cause any flutter of eyelids in terms of getting debts paid no sooner that it becomes due.

Risk Rating = 1


Alfa Romeo, Birra Moretti, Diesel, Zanussi and many other well known manufacturing, and fashion brands are known to stem from this region.

Economically, however they are second only to Greece to have the highest amount of public debt in circulation.  Despite the last government trying to bring in US-style democracy into its fortitude, there are numerous austerity measures in place to try and overcome its debt issues.

Credit ratings do not fare well, and that it has an average credit rating.  Legal action too can prove troublesome, especially as some of the laws within the country are different in being to that outside this country.  In my experience, the majority of Italian legal issues that have risen have gone unsettled, and it is with this in mind, that I would suggest anyone looking to do business with this region, to ascertain a higher deposit to counteract debts that are likely to go bad.

Risk Rating = 4

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