The UK's accounting sector reached a record high for monthly revenue in March, according to data from the Office for National Statistics released on Thursday. However, gains may be short-lived due to the impact of the uncertainty sparked by the Iran conflict.
Record Revenue Figures
In March, the industry's revenue spiked by nearly ten per cent to £4.3bn compared to £3.96bn in February. This is the highest ever recorded and nearly five per cent higher than March last year. In comparison, growth in the services sector, which includes accounting, grew by 24 per cent between February and March this year, while the wider economy grew by 0.3 per cent, enough to beat forecasts.
Expert Commentary
Suren Thiru, chief economist at the Institute of Chartered Accountants, said the figures “suggest a refreshingly resilient first quarter for the economy”, but the fallout of the Iran war has undoubtedly had an impact. “March’s surprisingly strong outturn is flattered somewhat by businesses bringing forward activity to guard against the turmoil triggered by the Iran war,” Thiru added.
Thiru noted that the figures “may reinforce the more hawkish stance among rate-setters caused by the Iran war,” but a June rate rise “still looks unlikely given lingering uncertainty over the conflict’s impact.” Rising consumer spending and business investment “suggest that some activity was revived as uncertainty eased following November’s Budget,” Thiru said, but the “financial squeeze unleashed by the conflict means this improvement is likely to be short-lived.”
Industry Outlook
Julie Matheson, accounting industry regulatory partner at Kingsley Napley, said while the results are “a new sector high,” March “is always a healthy month for revenues.” “Today’s figures no doubt reflect a rush of pre-financial year end activity and also perhaps the fact that some client activity was reportedly brought forward before the longer-term effects of the Iran war are felt,” Matheson said.
Despite the positive figures, the accounting industry is facing problems in other areas, including hiring, recent data suggests. Matheson added that alongside increased hiring costs, firm leaders “will have to navigate the choppy economic waters” for the rest of this part of the financial year, including the knock-on effects of rising fuel costs hitting companies and the “impact of UK political turbulence on our economy.” “A summer of lacklustre economic growth is predicted from which the accounting sector is unlikely to be immune,” Matheson concluded.
