The level of economic activity remains highly subdued with turnover in the management consultancy sector in decline or static in growth, reflecting reduced government expenditure on external consultants in conjunction with some private enterprises reining in expenditure on discretionary services.
The impact of fiscal austerity on the consultancy sector has been severe. On the upside, private sector fee income has risen; suggesting that the management consultancy sector is undertaking the rebalancing needed to offset falling revenue from government.
The professional services sector faces a number of challenges going forward which could curb future revenue growth. Large law firms have been affected by a sharp decline in M&A activity. Meanwhile, low property transaction volumes and subdued business activity in other sectors will suppress growth among smaller legal firms. Further consolidation is expected.