• UK consulting grows four times faster than economy in 2016 (up 7.5 per cent)

• Financial Services work – the largest sector for consultants – to be impacted by post-Brexit passporting issues and regulatory changes

• Public sector work up 4.6 per cent to £1.3bn in 2016, with a potential post-Brexit consulting boom on the horizon

A new report published today (13th March 2017) finds the UK’s management consulting sector grew four times faster than the economy in 2016 – up 7.5 per cent to £7.3bn - and looks set to grow further as a result of Brexit, as its two biggest customers - financial services (worth £2.3bn to consultants) and the public sector (£1.3bn) – are likely to turn to consultants for help.

Over the last five years, the UK’s consulting market has seen strong growth, increasing in size by over a third (£1.7bn). Growth in both financial services and the public sector work has added almost £1bn to the size of the market, and both sectors are now faced with major post-Brexit issues.

But the new report from Source Global Research, the leading research and strategy firm for the global management consulting industry, says that with London’s status as the financial hub of the world in doubt, many consultants are anxious about how things will play out for them. The report says that much will depend on the particulars of the Brexit deal, specifically with regard to passporting, but further uncertainty thrown up by the US election has left UK financial services in a precarious position.

Nigel Slater, UK Head of Management Consulting at KPMG, who was interviewed for the report, said:

“For banks, the obvious issue is passporting, with everyone trying to work out how best to continue their existing businesses with the minimum amount of impact to top growth plans and customer service.”

Thousands of advisers needed in the public sector…

In contrast, consultants serving the public sector, who have seen work only marginally rise over the last five years, are feeling positive. The report says that with the government seemingly unprepared for the enormous task of negotiating a Brexit deal and preparing for a post-Brexit UK, many consultants anticipate boom times. One consultant interviewed for the report said: “There could be a need for 3,000 to 5,000 consultants, lawyers, etc. supporting the government’s Brexit negotiations.” Another consultant added, “The government approached all strategy houses for free advice. We said no, and I think everyone else did, too.”

Source points out in the report that uncertainty has also been highlighted on the client side, with predictions about the impact of Brexit split. A November 2016 client survey conducted by Source found that while nearly half (46 per cent) of clients expect business confidence to suffer because of Brexit, a quarter (24 per cent) are already stepping up their use of consultants in response to Brexit.

The same survey found that the biggest consulting firms are set to prosper most as 82 per cent of clients said they expected to turn to the Big Four for answers to at least some of their Brexit issues. One consultant commented in the Source report, ‘The Big Four will make hay out of Brexit, because of the number of trade agreements that will have to be negotiated.’

Fiona Czerniawska, Director of Source Global Research said:
“The aftermath of Brexit put the consulting market on pause, as everyone took a step back to assess the implications. But still, the constantly evolving picture is making it hard for both clients and consultants to be confident about what the impact will be.

We can be certain that a post-Article 50 world will feel very different from one industry to the next; clients in financial services have a number of concerns ranging from passporting to regulation, while the relative value of the pound will be of concern to retailers - all of which could generate considerable demand for consulting services.”

Other key findings from the report included: