22Chief Economists Outlook Unsurprisingly, when asked to select the three policy areas currently displaying the highest levels of uncertainty, there was near unanimity (97%) among the chief economists in choosing trade policy. This was followed by monetary policy at 49% and fiscal policy, which was selected by 35%.In addition to making economic policy- making more challenging in each of these areas, the recent surge in uncertainty also increases the risk of damaging policy coordination missteps both within and between countries. Figure 21. Areas of uncertainty Globally, which of the following areas are currently subject to the highest level of uncertainty? (select the top 3) Trade policy Monetary policy Fiscal policy Industrial policy Technology regulation Environmental policy Energy policy Migration policy Tax policy Competition policy Financial regulation Percent of respondents (%)49 35 27 22 16 16 14 11 8 597 Source: Chief Economists Survey. (2025, April). The economic fallout of intensifying geopolitical and geoeconomic tension is now visible across these results, in trade policy, most notably, as well as the expected second-order impact on monetary policy. Uncertainty has further macroeconomic impacts through its effects on government spending: shifts in the global security architecture have caused the steepest year-on-year rise in global military spending since at least the end of the Cold War.52 This is perhaps clearest in Europe, where Germany recently overhauled its fiscal framework largely in order to facilitate increased defence spending,53 but all of the world’s top 15 spenders in 2024 increased their military expenditure.54 For the first time, the US announced a defence budget that surpasses $1 trillion.55 52 Stockholm International Peace Research Institute (SIPRI). (2025). 53 Gann, M. (2025). 54 Stockholm International Peace Research Institute (SIPRI). (2025). 55 McLeary, P . et al. (2025).

Chief Economists Outlook May 2025