Growth in the UK consulting industry slows as businesses cut back on non-essential spending in the run-up to Brexit, according to the MCA

Consultancy firms saw the rate of growth in their fee income slow last year, in what the Management Consultancies Association (MCA) has called a worrying sign for the UK business economy.

The trade body’s annual report, released today, shows that fee income in the consulting industry grew by 4.76 per cent last year – down from eight per cent in the previous two years.

According to the MCA, this suggests that businesses – which are experiencing a slowing of headline growth – are deferring growth-supporting projects and cutting back on discretionary spend. The MCA added that interviewees for the report suggest this challenge is intensifying in 2017.

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“In the early part of this decade, before the wider economy returned to consistent growth, firms started to hire consultants to help them gear up for growth,” said MCA deputy chief executive and MCA Think Tank director Paul Connolly.

“As the economy started to grow, the consulting industry outpaced that growth by around five per cent. Now consulting growth, though welcome, is substantially down on the eight per cent of 2014 and 2015. This suggests that businesses are becoming more bearish.”

Most of the growth came from specialist consultancy firms, who boosted their fee income by six per cent. Larger firms, such as PwC, Deloitte, KPMG and IBM, saw an average of four per cent growth.

According to the MCA, Brexit is a key concern for the consulting industry. A quarter of UK consulting revenues come from overseas, around half of that from the EU, and around 17 per cent of staff in firms are migrants.

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Although Prime Minister Theresa May confirmed last month in Florence that there would be a “transition period” to allow for post-Brexit acclimatisation, this is not enough according to Connolly.

“A transition period was always going to be necessary, but we are no clearer on the basic question: transition to what? The ultimate shape and character of Brexit remain unclear,” he said.

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