2023
9
UK Accounting and Financial Management Market Report 2023
2023-03-23T03:10:42+00:00
OX1156333
1495
161718
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Report
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"With more accountancy firms establishing themselves as truly multidisciplinary professional services, they increasingly play a vital role in providing commercial advice that supports innovation, growth and strategic goals. Accountancy firms…

UK Accounting and Financial Management Market Report 2023

£ 1,495 (Excl.Tax)

Description

This report looks at the market trends shaping the future of the UK accounting and financial management industry. Featuring market size and performance, a five year market outlook and a comprehensive overview of industry structure and competitive strategies, the report provides everything you need to stay ahead of your competition in the UK financial management market.

This Report Looks At the Following Areas:

  • Market drivers in the key sectors of the market
  • The trend among accounting firms to expand their service offering to meet the evolving needs of clients and differentiate themselves on the comprehensiveness of their offerings
  • How firms can grasp opportunities in the more challenging macro-economic environment
  • How the industry is embracing digitalisation
  • The impact of legislative and regulatory changes
  • Five-year market outlook

UK Accounting and Financial Management Market Overview

Despite the severe business disruption caused by the pandemic and recent economic challenges, the UK market for accounting and financial management has shown resilience over the last three years. In 2022, the UK market for accounting and financial management market increased by an estimated 6% to £32.8 billion.

With the UK economy expected to hit recession this year and with businesses grappling with ongoing challenges, including inflation and rising interest rates, this will pose challenges for the accounting and financial management industry. This is likely to hit firms’ profits in 2023. However, there are opportunities to be grasped as clients increasingly look to their accountant as a trusted advisor to help them navigate these challenging times. General inflationary pressure and ongoing staff shortages are likely to impact audit fees, with further hikes expected in 2023.

UK Accounting and Financial Management Market – Market Trends

Increased software and technology use has commoditised some traditional tax and accounting functions. Therefore, margins from some services are becoming increasingly squeezed, especially at the bottom end of the market. The digital transformation of business is set to remain a key driver of the advisory services sector. Data analytics, cybersecurity, risk consultancy, supply chain expertise and ESG advice are also playing an increasingly important role in consultancy. Major accountancy firms will continue to invest in these high-growth areas to boost their capabilities and credentials. This will include increased spending on training and upskilling employees, targeted partner hires or acquisitions of sector specialist consultancies.

Expert Analysis from a B2B Specialist

This report, written by Claudia Preedy, a leading B2B analyst, delivers in-depth commentary and analysis to highlight current trends in the UK accounting and financial management market and add expert context to the numbers.

“With more accountancy firms establishing themselves as truly multidisciplinary professional services, they increasingly play a vital role in providing commercial advice that supports innovation, growth and strategic goals. Accountancy firms can be expected to continue to expand their consulting capabilities in line with evolving client requirements. This includes increased spending on upskilling employees, targeted partner hires or acquisitions of sector specialist consultancies. Key areas of growth for advisory services include digital transformation data analytics, strategy, risk and regulatory consultancy, cybersecurity, supply chain expertise and ESG advice.”

Claudia PreedyClaudia Preedy
Principal Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Covered in this Report
  2. Executive Summary

    • The five-year outlook for UK accounting and financial management
      • Figure 1: Category outlook, 2023-28
    • The market
    • Accounting and financial management market shows resilience
      • Figure 2: UK market for accounting & financial management, 2018-22
    • Increased demand for consulting services drives market growth
    • Audit and accounting services sector up by an estimated 4% in 2022
    • Increased demand for tax advice and compliance services
    • Demand for corporate finance & business recovery services up by an estimated 9% in 2022
      • Figure 3: Segmentation of the UK market for accounting & financial management, by type of service, 2022 (£ million and %)
    • Advisory services and restructuring activity to drive growth in 2023
      • Figure 4: Forecast UK market segmentation for accounting & financial management, by type of service, 2023-27
    • Companies and brands
    • Big Four account for some 80% of top 20 firms’ UK fee income
      • Figure 5: Top 10 accounting firms in the UK, by fee income, 2022 (% of top 10 fee income)
  3. Issues and Insights

    • Technology integration to help improve audit quality
    • ESG offers strong growth opportunities for accountants
  4. Market Size and Performance

    • Overview
    • Accounting and financial management market shows resilience
      • Figure 6: The UK market for accounting & financial management, 2018-22
      • Figure 7: The UK market for accounting & financial management, 2018-22
  5. Market Segmentation

    • Increased demand for consulting services drives market growth
      • Figure 8: Segmentation of the UK market for accounting & financial management, by type of service, 2018-22
      • Figure 9: Segmentation of the UK market for accounting & financial management, by type of service, 2022 (% of total)
    • Audit & accounting
    • Audit reforms have not yet sufficiently boosted competition
    • Barriers for challenger firms
    • Further reforms on the way to improve competition and audit quality
    • Accountants invest in technology to help improve audit quality
    • Audit and accounting services sector up by an estimated 4% in 2022
      • Figure 10: UK fee income from audit & accounting services, 2018-22
    • Tax services
    • Increased demand for tax advice and compliance services
    • Implications of Making Tax Digital for accountants
    • Tax services sector accounts for around a fifth of the total market
      • Figure 11: UK fee income from tax services, 2018-22
    • Consultancy
    • Firms continue to focus on strengthening advisory services capabilities
    • Big Four benefit from increased public spending on external consultants
    • Key growth areas for consultancy services
    • Demand for consultancy services shows double-digit growth
      • Figure 12: UK fee income from consultancy services, 2018-22
      • Figure 13: UK fee income from consultancy services, 2018-22
    • Corporate finance and business recovery
    • Demand for insolvency and business recovery services accelerates
    • M&A activity slows to pre-pandemic levels in 2022
    • Demand for corporate finance & business recovery services up by an estimated 9% in 2022
      • Figure 14: UK fee income from corporate finance & business recovery services, 2018-22
    • Overseas trade in accountancy services
      • Figure 15: International trade in accountancy services, 2017-21
      • Figure 16: Exports and imports of accountancy services, 2017-21
  6. Market Forecast

    • Market expected to demonstrate sustained growth
      • Figure 17: Category outlook, 2023-28
    • Advisory services and restructuring activity to drive growth in 2023
      • Figure 18: Forecast UK market segmentation for accounting & financial management, by type of service, 2023-27
      • Figure 19: Forecast UK market segmentation for accounting & financial management, by type of service, 2023-27
    • Learnings from the last recession
      • Figure 20: Industry performance following the last recession (£m), 2008-16
    • Forecast methodology
  7. The Impact of the Economy

    • Recession fears remain as UK economy flatlines
      • Figure 21: Annual GDP growth rate, 2017-22, (annual % change)
    • Bank Rate hiked to 4% in February 2023, the highest level for 14 years
      • Figure 22: Bank Rate, 2008-23, by date of adjustment (%)
  8. Market Trends

    • Consulting services are key drivers for business growth
    • Digital technology set to become an even bigger part of the consulting market
    • Big Four hold strong position in cybersecurity consulting sector
    • Investment in technology to help improve audit process and quality
    • Cloud is levelling the audit field
    • ESG presents big opportunities for accountants
    • Accountancy firms show interest in lucrative tech start-up sector
    • The Big Four are making major inroads in legal services sector
    • ‘Big data’ and data analytics represent growth areas for accountants
  9. Regulatory and Legislative Environment

    • Industry regulation
    • FRC to be replaced by new regulator as part of reforms of the UK’s audit and corporate governance framework
    • Audit market reforms open up market to increased competition
    • Further audit reforms on the way to improve competition and drive up quality
    • Making tax digital
    • Crackdown on tax avoidance
  10. Market Drivers

    • Number of active businesses in the UK
      • Figure 23: Number of private sector businesses in the UK, 2008-22
      • Figure 24: Number of private sector businesses in the UK, 2008-22
      • Figure 25: Number of VAT and/or PAYE-registered enterprises in the UK, by broad industry group, 2016 and 2022, (number and %)
    • Pandemic has set growth trend in self-employment into reverse
      • Figure 26: Self-employed workers in the UK, 2012-22
    • But business start-ups remain resilient
      • Figure 27: Number of newly incorporated companies in the UK, 2019-22
      • Figure 28: Number of newly incorporated companies in the UK, 2016-22
    • UK tech start-up sector continues to thrive
    • Insolvencies hit highest number since financial crisis in 2022
      • Figure 29: Number of company insolvencies, receiverships and administrations in England & Wales, 2012-22
    • Trends in M&A activity
    • Credit conditions are tightening
    • M&A activity cools down in 2022 following a buoyant 2021
      • Figure 30: Mergers and acquisitions involving UK companies, 2009-22
    • UK IPO activity slows in 2022
      • Figure 31: Number of main market and AIM-listed companies, 2012-22
      • Figure 32: Number of main market and AIM-listed companies, 2014-22
  11. Industry Structure

    • Overview
      • Figure 33: Top 20 accounting firms in the UK, by fee income, 2022
    • Number of audit firms continues to decline
    • Five largest firms outside the Big Four are auditing more FTSE 350 entities
    • Industry Structure
      • Figure 34: Analysis of the changes in the structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2018-22
    • Structure by employment
      • Figure 35: Analysis of the employment structure of the accounting, bookkeeping, auditing and tax consultancy industry, 2021 and 2022
    • Structure by turnover
      • Figure 36: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2021 and 2022
      • Figure 37: Analysis of the financial structure of the UK accounting, bookkeeping, auditing and tax consultancy industry, 2022
    • Trends in acquisitions, partnerships and alliances
  12. Competitive Strategies

    • Firms announce major expansion plans for consultancy arms across the UK
    • Some firms pursue expansion of their legal businesses
    • EY uses acquisitions to support its growth ambition and expand range of services and skills
    • Some firms look to divestments to raise capital for investments
    • PwC launches new global strategy and commits to major investment
    • BDO raises investment in people, quality and technology
    • Launch of new advisory service offerings
    • KPMG expands its digital solutions product offering
  13. Company Profiles

    • BDO LPP
    • BDO raises investment in people, quality and technology in FY22
    • Financial performance
      • Figure 38: Financial analysis of BDO, 2018-22
      • Figure 39: Segmental turnover analysis of BDO, 2022, (£m and %)
    • Deloitte LLP
    • Recent disposals
    • Recent acquisitions
    • Deloitte plans to grow consulting practice by 40% by 2027
    • Recent innovation investments
    • Financial performance
      • Figure 40: Financial analysis of Deloitte, 2021-22
      • Figure 41: Segmental turnover analysis of Deloitte, 2022, (£m and %)
      • Figure 42: UK revenue by industry sector, 2022 (£m and %)
    • Ernst & Young LLP
    • Investing in audit quality
    • Recent acquisitions
    • Consultancy expansion plans
    • EY launches Neuro-Diverse Centre of Excellence in the UK
    • EY launches new sustainability service offering
    • Investment in people
    • Financial performance
      • Figure 43: Segmental turnover analysis of EY, 2021 (£m and % of total)
      • Figure 44: Financial analysis of Ernst & Young, 2017-21
    • Grant Thornton UK LLP
    • Grant Thornton launches new Economic Consulting practice
    • Collaboration with KNIME to enhance data science offering
    • Financial performance
      • Figure 45: Segmental turnover analysis of Grant Thornton, 2021, (£million and %)
      • Figure 46: Financial analysis of Grant Thornton UK, 2017-21
    • KPMG LLP
    • Global KPMG network commits $5 billion investment in technology, people and innovation
    • KPMG sells restructuring division
    • KPMG launches new business ‘KPMG Products’
    • 2022 sees other new product launches
    • Financial performance
      • Figure 47: Segmental revenue analysis of KPMG, 2022, (£ million and % of total)
      • Figure 48: Financial analysis of KPMG, 2018-22
    • Pricewaterhouse Coopers LLP
    • PwC launches new global strategy and commits to major investment
    • Recent disposals and acquisitions
    • PwC to create 1,000 roles at new Manchester technology hub
    • PwC plans to double size of its UK legal arm
    • Financial performance
      • Figure 49: Segmental turnover analysis of PwC, 2022, (£m and % of total)
      • Figure 50: Financial analysis of PwC, 2018-22
    • RSM UK Holdings
    • Company performance
      • Figure 51: Segmental turnover analysis of RSM UK Holdings, 2022, (£million and % of total)
      • Figure 52: Financial analysis of RSM UK Holdings, 2018-22
  14. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Methodology
  15. Further Sources and Contacts

    • Trade associations
    • Trade magazines
    • Trade events

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This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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