Regional Review: Europe 2025
Regional Highlights
Europe remains a pioneer in global professional services where regulatory oversight, sustainability mandates and digital transformation advancements are setting the standards for other regions to increasingly follow.
While geopolitical tensions, economic headwinds and fragmented standards continue to drive uncertainty, the structural bedrock of IFSR familiarity and advanced compliance frameworks continue to set the example globally.
Digital platforms and AI driven analytics are now essential for compliance and greater efficiency.
The dominant theme of ESG transparency is driving technology integration presenting a blueprint for other regions.
Europe doesn’t escape the widening talent gap. The demand for technology savvy professionals capable of navigating evolving client demands and at the same time adept at using and identifying the prevailing risk with these tools is reshaping talent strategies.
Our report examines the forces at play in this challenging climate and how Praxity’s regional collaboration is a force for success.
Geopolitics continue to dominate
Europe continues to feel impact of the conflict of the ongoing conflict in the Ukraine and its wider geopolitical consequences. Reduced Russian energy supply has driven the diversification to renewables. Higher energy prices continue to affect manufacturing and heavy industries, and the EU and to a broader extent the UK continue to develop initiatives to achieve energy independence with a focus on the transition to green energy.
Rerouting of supply chains away from Russia and Belarus has increased logistical costs for transport firms and, like most regions, the nearshoring trends continue in a bid to insultate themselves from supply chain interruption .
Dr. Daniel Ternes, Partner, Flick Gocke Schaumburg & Praxity European Regional Chair
“Inflationary pressures and supply chain disruptions have compounded the strain, particularly in manufacturing and energy-intensive industries. Clients are cutting budgets and expect us to become more efficient,”
says Dr. Daniel Ternes, European Regional Chair, reflecting a trend that is reshaping client expectations across the region.
Widespread inflation driven by energy and commodity volatility continues to breed unease in the markets with fluctuating interest rate adjustments and the knock-on effect on borrowing and investment. Global trade dynamics across the region remain unpredictable, with shifting tariff regimes and protectionist measures influencing supply chains and cost structures across regions. Military spending has diverted investment from growth sectors, leaving many businesses cautious. The EU readiness package, aimed at strengthening defence and stimulating growth represents a major fiscal shift. The long tail of Brexit continues to make its presence felt as firms continue to adjust to refined trade and compliance norms.
In a region known for stringent control framework, policy makers continue to push for accelerated green transition as part of energy independence. While fragmented accounting standards remain a barrier to seamless cross-border operations, Europe retains structural advantage. They have a mature reporting framework with firms well-versed in IFRS, enabling smoother cooperation when compared to other global regions.
Increased reporting complexity and regularity in the region is contributing to the evolving digital transformation. Squeezing margins are pushing the drive to automate routine accounting procedures such as data entry, reconciliation, and audit sampling faster than ever. Although cultural resistance and trust in AI are stalling widespread implementation the competitive advantage of embracing the technology is driving acceptance.
Cloud platforms are now the norm in Europe enabling real time collaboration and scalability across borders despite the differences in national reporting standards.
“We can’t spend like EY or Deloitte, but we can move faster and that means working closer together to share tools and best practices.” Shares Daniel. “Cloud accounting, automation, and AI-driven analytics are no longer optional; they are becoming essential for efficiency and competitiveness. Praxity’s collaborative model allows firms to exchange insights on implementation, avoiding costly missteps and accelerating adoption.”
Blockchains offer increased transparency and reduced fraud risk and European regulatory bodies are exploring standards for blockchain based auditing, with predictive analytics and visualisation tools increasingly used for risk assessment and scenario planning.
While smaller firms no doubt face investment barriers in keeping pace with the digital evolution, their agility and lower test budget/ implementation costs could present an advantage against bigger firms with their unwieldy legacy interfaces, given the right strategy.
Sustainability and ESG Reporting
Integrated technologies like AI, IoT, and blockchain enhance ESG data accuracy and traceability and make the road to compliance more streamlined. These tools enable automated ESG data collection and real-time reporting. In a bid to reduce fragmentation and compliance risk, European accounting bodies collaborating to align tech adoption and ESG standards.
CSRD compliance is now a central requirement for firms operating in Europe. The directive demands structured ESG data, double materiality analysis, and reporting under ESRS. Aimed at driving transparency and accountability in sustainability reporting, it applied from 2024 for large companies with a phased rollout through 2028. To meet these obligations and reduce duplication, firms should integrate ESG data collection into existing accounting workflows, rather than creating separate processes.
Digital tagging tools for ESEF and XBRL are essential for meeting format requirements. Early adoption of these tools will simplify assurance and reduce last-minute compliance risks. Firms should also strengthen internal controls and documentation to prepare for mandatory external auditing of sustainability reporting.
Technology adoption for reporting is increasingly critical for efficiency and compliance. Elsewhere automating data capture for emissions and resource use can save time and improve reliability. Cloud platforms allow for real-time collaboration across borders, supporting interoperability between EU and UK standards. Emerging predictive analytics can help firms anticipate regulatory changes and client needs, adding strategic value beyond compliance.
Latest Reporting Standards
IFRS 18 (effective 2027, preparation starts now) introduces a new structure for the statement of profit or loss, requiring:
- Defined categories (operating, investing, financing, tax, discontinued operations).
- Mandatory disclosure and reconciliation of management performance measures (MPMs).
- Enhanced aggregation/disaggregation principles for transparency.
While full adoption is in 2027, firms are already preparing for system and process changes.
Global Alignment and Emerging Standards
While Europe leads with CSRD and ESRS, firms must also track global frameworks shaping sustainability and financial reporting. They are establishing a global baseline for climate and ESG disclosures, complementing CSRD’s detailed requirements.
Voluntary legacy frameworks such as TCFD and SASB remain influential, particularly for sector-specific risk reporting, while the GRI Standards continue to guide comprehensive sustainability disclosures providing globally recognised frameworks for climate risk and sector-specific ISSB Standards (IFRS Sustainability Disclosure Standards)ESG disclosures, allowing interaction with CSRD and enhancing investor confidence.
Financial services firms face additional obligations under the EU Taxonomy Regulation and SFDR, which define sustainable activities and mandate transparency in investment products. Together, these frameworks signal a shift towards greater alignment of CSRD with ISSB and GRI and can reduce duplication, enhancing comparability across borders.
Early integration of these standards into reporting strategies will position firms for global compliance and investor confidence, while leveraging technology for data capture and assurance remains critical to meeting these complex requirements.
Talent
Like much of the global accounting talent pool the demand for tech savvy professionals is a significant challenge in Europe with an urgency around upskilling and cultural agility. Learning and development leaders face an uphill struggle to fill the skills gap as they try to keep pace with the evolving tech expertise required to fully embrace these tools.
Praxity collaboration offers a practical advantage. Sharing templates, audit methodologies, and vendor insights reduces cost and accelerates implementation. Smaller firms can leverage this network to overcome resource constraints and maintain competitiveness.
Alliance Perspective
Europe’s professional services market is navigating one of its most challenging periods in recent memory. Economic uncertainty, geopolitical tensions, and regulatory complexity are reshaping priorities for businesses and advisors alike. Yet, amid these headwinds, Praxity firms are demonstrating resilience, strengthening relationships, embracing technology, and finding new ways to deliver value. As Regional Chair Daniel Ternes explains, collaboration and adaptability are proving to be the Alliance’s greatest assets.
“A shifting landscape within the Alliance has prompted Praxity firms to work more closely than ever. The dynamic is evolving, with younger partners bringing fresh energy and a stronger appetite for initiatives like secondments and next-generation meetings. “Everybody is more open,” says Daniel, pointing to a cultural shift that prioritises connectivity and shared learning more than ever before.
Technology is another focal point. Smaller firms lack the vast resources of the Big Four, but their agility offers an edge. “AI is the topic for the coming years,” Daniel explains.
For Daniel, the Alliance’s greatest strength lies in personal relationships. “The global leadership meeting once a year is the most important thing,” he says. “I can really say to my clients, I know the advisor I contact.” This human connection differentiates Praxity from larger networks, where scale often comes at the expense of familiarity. The challenge, however, is communicating this advantage to clients who see multiple brands as fragmented. “It’s difficult to make them believe in it,” Daniel admits, underscoring the need for continued brand elevation without overshadowing individual firms.
Daniel highlighted recruitment as a priority. Although there is strong coverage in the UK and Germany and the Netherlands, gaps remain in Eastern Europe. Filling these spaces will strengthen the Alliance’s ability to offer seamless support across Europe, a goal that aligns with Praxity’s long-term strategy.
Opportunities in Adversity
While the economic outlook is subdued, opportunities exist for firms that can pivot quickly. Advisory services in restructuring, ESG compliance, and digital transformation are in demand as clients seek guidance through uncertainty. Cross-border expertise remains a differentiator, particularly for firms leveraging IFRS familiarity to support international clients. “We already work with clients in Austria and France,” Daniel notes. “The differences are small, and that makes cooperation easier.”
The road ahead for Europe is not without obstacles. Economic headwinds, regulatory complexity, and geopolitical uncertainty will continue to shape the market. Yet, Praxity firms are well-positioned to thrive through collaboration, agility, and innovation. As Daniel concludes, “It’s about working closer together, sharing tools, sharing ideas, and staying connected.”