Confidence among global accountants declined again in early 2025, although the fall was much less marked than in Q4 2024, according to the Q1 2025 Global Economic Conditions Survey (GECS).

The survey from ACCA (the Association of Chartered Certified Accountants) and IMA^® (Institute of Management Accountants) suggests that confidence remains at its lowest since Q2 2020. The survey of accountants took place between late February and mid-March and so it was completed in the build-up to last week’s major announcement by the U.S. on import tariffs which significantly increased the downside risks to the global economy.

Confidence fell markedly in North America amid a huge fall in the U.S. Confidence among U.S.-based accountants is at its second lowest ever, with commentary from survey respondents suggesting that U.S. trade policy has been the key factor weighing on sentiment, as well as cuts in government spending. Expectations for increases in the latter have fallen sharply in recent quarters. Moreover, the U.S. Capital Expenditure and Employment indices both declined and are at very low levels historically. More encouragingly, the U.S. New Orders Index rose again and is not too far below its average.

Elsewhere confidence registered a decent increase in Western Europe, although it remains at a very low level by historical standards. Somewhat encouragingly, there were also improvements (albeit relatively small) in the New Orders, Capital Expenditure and Employment indices. While they all remain below their historical averages, the New Orders Index is only modestly so.

Cost pressures remain an issue, with the proportion of respondents reporting increased operating costs remaining very high by historical standards. Some improvement in the UK indices helped boost the regional aggregates, although the key indicators for that country remain below their averages: confidence and employment significantly so.

Growth in the euro area and UK is likely to remain slow in 2025 and the rise in U.S. import tariffs creates material downside risks. That said, the reform of the government debt brake in Germany, which will likely lead to significant increases in spending on defence and infrastructure, should be a helpful tailwind for the region in the future.

Meanwhile, cost pressures increased globally. They remain very elevated in Western Europe and rose quite materially in North America.

Jonathan Ashworth, Chief Economist, ACCA, said: ‘Global growth has generally proved quite resilient over recent quarters. Nonetheless, the longer that confidence remains depressed, the greater the risk that a self-reinforcing negative cycle could potentially develop, with firms pulling back on orders, capital expenditure and hiring. Unfortunately, with global trade tensions stepping up markedly since the survey was completed, the downside risks to the global economy have increased significantly.’

Alain Mulder, Senior Director, Europe Operations & Global Special Projects at IMA said: ‘New U.S. policies on trade and government spending, and the uncertainty surrounding them, appear to have had a large negative impact on confidence, while declines in the global markets and signs of slowing in the U.S. economy were likely factors too.’

The economy remained the highest overall risk identified by accountants in Q1, but responses varied across sectors. Cybersecurity was the highest for financial services and tied in first with talent scarcity for the public and not-for-profit sector. The corporate sector ranked economic woes first and geopolitical instability a tight second. Geopolitical risks came in second overall – the first time it was above third – with respondents in the U.S. especially, commenting on the implications of new policy changes and tariffs.

Read the full survey here.