UK accountancy firm growth at highest levels since 2008
Statistics show that the number of new accountancy businesses is increasing at its fastest rate since the recession.
The accountancy profession is returning to a state last seen before the financial crisis, according to research from SJD Accountancy. The firm’s report showed the number of accountancy related startups increased at the fastest rate since 2008.
SJD Accountancy’s figures show that the number of accountancy businesses in the UK stands at 44,025. That’s a 6.2 per cent increase when compared with the 41,455 total at the end of last year and a 15.5 per cent increase from the total of 31,115 in 2008.
It’s indicative of the health of the overall economy as well as government measures to support small and medium-sized enterprises (SMEs), but the figures also illustrate that the growth of SMEs in the accountancy industry is outpacing that of any other sector in the UK.
The total number of operating businesses in the UK rose by a mere 5.3 per cent since 2008, nearly a third of the growth rate of accountancy firms. It’s a staggering difference and may be, in part, due to the recession.
Recessions benefit accountants?
It must be said that the accountancy industry, like most others, can only gain a boost when economic activity is booming. However, even in times of low activity the skills of an accountant are in demand, which means the industry weathers the storm better than a number of others.
“Demand for accountants is often said to be counter-cyclical. While it is true that in bad times you still need an accountant, the profession clearly benefits from an uptick in economic activity,” said Simon Curry, chief executive of SJD Accountancy.
“Accountants were focused on cost-cutting and reducing headcounts during the recession, but the emphasis is shifting so that accountants with strong resource planning and change management skills are increasingly in demand as businesses grow,” he added.
The increase in the number of new accountancy firms along with impressive rate of growth can partly be attributed to practitioners leaving larger firms during the recession to “strike out on their own”. Reasons could range from redundancies, slow pay growth, lack of career progression, or simply because they wanted to be in charge of their own business.
No matter the reasoning, it’s clear that accountancy firms were flourishing in inclement times. The report also showed that the number of jobs in the accountancy sector increased from 157,000 to 177,000 in the period between 2009 and the end of 2014.
That’s a whole lot better than the financial services sector, where the number of jobs marked a significant drop in the same period - falling from 1,178,000 to 986,000.
But it might not just be the accountancy sector that benefited from the recession.
Recessions boost SMEs?
It seems that small businesses boom in times of economic downturn. Data from the Department of Business Innovation and Skills shows that the UK held more than five million established small firms at the beginning of last year (2014), the first time the business population exceeded five million.
That’s a record increase of 330,000, or 6.7 per cent, compared to the beginning of 2013 and an impressive increase of just under one million or 17.3 percent when compared to the number of active businesses in 2008.
Furthermore, data from Companies House revealed that a record number of startup businesses were created last year.
Shafiq Khan, a partner at accountancy firm Clough & Company, commented: “The recession has completely transformed the outlook for small businesses.”
“Banks and alternative finance providers coming into the market are more than happy to lend to startups that can present a great business idea supported with a good business plan.”
It’s apparent that the UK remains a great place to branch out on your own and start a business, regardless of how the economy is faring.