Many businesses – both in the UK and throughout the world – were left stunned and without sufficient contingency plans when UK voters opted to leave the European Union last month. The subsequent confusion among companies as to what implications the referendum result may have has resulted in significant demand for support from the professional services sector.
With ambiguity prevailing over what will happen next, businesses will be planning for all eventualities over the coming months and, in some ways, through all of the uncertainty, there is one group of companies benefiting in the short term – the Big Four: KPMG; PwC; Deloitte and EY.
The current market
While the present situation may look bleak for businesses, the reality of what leaving the EU means for the UK and global organisations will be felt in the coming months and years.
In its latest financial stability report, just released, the Bank of England warns “there is evidence that some risks have begun to crystallise. The current outlook for UK financial stability is challenging.”
Indeed, the pound has crashed to $1.30:$1, the value of sterling decreasing by more than 12% since the eve of the referendum result.
Pessimism is growing among UK businesses. The number of businesses feeling pessimistic about the economic outlook for the next year spiked to 49% in the week following the EU referendum, up from 25%, according to data published by YouGov and the Centre for Economic and Business Research. Decreasing confidence in the UK could lead to reduced investment and hiring freezes across the country.
Brexit is also already having an effect on the price of goods UK. US computer device manufacturer Dell and Chinese smartphone company OnePlus are both increasing their prices, while more companies plan to follow suit. OnePlus has announced it plans to increase the price of its latest handset by 6.5% in the UK from 11 July.
“While we’ve held off action for as long as we can, the sharp drop witnessed in the currency markets following the Brexit decision has forced us to re-evaluate the OnePlus 3’s pricing in the UK at a time of significant demand.”
In a bid to reduce loss of foreign direct investment, the UK government has announced plans to reduce corporate tax to less than 15% to encourage further investment among businesses.
Professional services demand grows
Amid the confusion and panic, companies are beginning to make sense of things with the help of the professional services sector. The main priorities being: what does the UK’s withdrawal mean for EU workers, businesses’ supply chains and for organisations’ cash flows?
The Big Four firms are moving to meet with the crisis, developing teams to offer specific advice. KPMG has recently announced the appointment of Karen Briggs as head of Brexit on the firm’s executive leadership team.
In an interview with the Independent, PwC’s, Kevin Ellis, the firm’s incoming UK chairman said he is leading a new “Brexit” team, “supporting our clients with what Brexit may mean for their business plans; developing our insight on the impacts on industries, regions and people; and gearing up to resource areas where there is client demand".
"We are already seeing increased appetite for strategy advice as well as for support around treasury management, immigration advice and pensions," Ellis said.
As demand rises for specialist support, recruitment for professional services staff appears to be healthy at present. According to the Association of Professional Staffing Companies (APSCo), professional recruitment firms now have 2% more vacancies on their books than this time last year, despite current economic uncertainty.
Despite the uptick in demand for professional services , Brexit signifies more challenging times ahead when it comes to acquiring talent from around the world. With leading professional services firms sourcing their staff from a global pool of candidates, any restriction to free movement or further instability will seriously deter the movement of talent.
Furthermore, in a report written before the referendum, the Law Society of England and Wales outlined the negative long-term impact withdrawing from the EU would have on the UK legal services sector. According to its report the legal services sector and the EU, the UK sector makes an important contribution to the domestic economy worth £23bn annually. However, leaving the EU was predicted to lead to a loss as great as £1.7bn in 2030.
Although there will be an immediate boom for professional services firms, like all industries, the sector will feel the effect of the UK’s decision to leave the EU and individual firm’s strategies will be affected by Brexit.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.