The recent tax overhaul is buoying optimism among accountants and CFOs in the U.S., but fears of a trade war between the U.S. and China are dampening enthusiasm about the economy, according to a new survey.

The quarterly Global Economic Conditions Survey, released Thursday by the Association of Chartered Certified Accountants and the Institute of Management Accountants, polled 1,002 ACCA and IMA members, including more than 80 CFOs about economic confidence. The GECS report found global confidence in Q2 slipped from its high in Q1, although North America remained the most confident region in the world in the second quarter, with official data indicating the massive tax cuts leading to higher consumption. In sharp contrast was the United Kingdom, where economic confidence plummeted in Q2, with figures now well below the historic average for the ACCA and IMA survey.

“Confidence in the United States was flat in the second quarter of the year, but it remains high by recent standards,” said ACCA USA head Warner Johnston in a statement. “This is reflected in the official data, which suggest that the massive tax cut at the start of the year is leading to higher consumption. There are also signs that, with the unemployment rate at its lowest since 2000, a tight labor market is feeding into faster wage growth; this in turn is providing a further boost to consumption.”

After North America, Africa was the second most confident region. But globally, the slight dip in economic confidence reflected increasing worries about a trade war between the U.S. and China, which continues to effect global outlook, with China’s economic sentiment plummeting sharply.

“Our Q2 analysis mirrors other data that the global economic recovery has slowed since the start of the year,” said IMA vice president of research and policy Raef Lawson. “However, confidence is still high by past standards, and a sharp slowdown in economic growth is unlikely in the months ahead. The differences between regions and countries shows marked differences, with concerns about the China-U.S. trade war intensifying — these are uncertain times, and Q3’s results will be heavily impacted by the decisions made in the White House about tariffs.”

In the U.S., confidence was mostly unchanged in the second quarter, with the proportion of respondents feeling more confident about the future exceeding by nine percentage points those who feel less confident. That confidence is consistent with the latest hard data, which show that after a difficult Q1 the economy rebounded strongly.

Accountants in the U.K. are worrying about signs that their government is struggling to come to an agreement with the rest of the European Union on the terms of Brexit.

"While bad weather might have been blamed in part for the sharp drop in GDP growth in the first quarter to just 0.1 percent quarter on quarter, the underlying uncertainty over the outlook of the Brexit negotiations looks to be weighing on prospects," said Narayanan Vaidyanathan, head of business insights at ACCA. "Clearly these concerns were reflected in our survey."

Increased costs were the survey respondents’ biggest concern, cited by 61 percent of respondents (up from 54 percent in Q1). Second on the list of concerns was falling income (cited by 34 percent of respondents). Concerns about customers going bankrupt were cited by 19 percent and suppliers going bankrupt by 10 percent of respondents.

As for the future, ACCA and IMA’s research predicted that the outlook for the global economy remains positive, despite signs of slowing economic growth in some parts of the world since growth reached a peak in the second half of 2017. While the global economy is likely to remain strong in the year ahead, according to the report, a modest slowdown appears likely.

ACCA and IMA GECS business concerns

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