Accountancy revenue down 6.1% as GDP flatlines

Accountancy revenue down 6.1% as GDP flatlines

Jun 25, 2024

A stagnant month with 0% GDP for April due to wet weather and weak economic performance despite 0.7% growth over last quarter

The zero growth figures followed on from a chink of light with 0.4% growth in March.

The drop in accountancy revenue is not uncommon at this time of the year and was lower than previous years. The total revenue for the accountancy sector dropped to £3.78bn overall in April.

Julie Matheson, partner at Kingsley Napley said: ‘The accounting industry has managed to robustly weather economic and market headwinds. With the increased uncertainty of the UK general election, the coming months may see further focus on cost discipline as firms batten down the hatches.’

The overall services sector output actually grew by 0.2% in April; however, it was held back by falls in manufacturing (-0.9%) and construction (-1.4%) sectors.

Joe Nellis, MHA’s economic advisor said: ‘The flat figure for April GDP data while expected given activity tends to slow down around bank holidays is still disappointing. While the economy has recovered from a “technical recession” last year, growth is likely to remain sluggish for some time.

‘There may be more positive news on GDP later in the year given that UK construction and manufacturing PMI data have been steadily improving since the beginning of the year and they are a good lead indicator as to what we can expect in the medium term.’

The continuing decline in construction activity reflected a lack of building starts, poor weather hampering work and a tough residential housing market due to high mortgage rates.

Michael Wynne, director of Q New Homes, said: ‘The data is disappointing on virtually every level. The contraction isn’t just confined to certain subsectors of the construction industry either, with seven out of nine heading in the wrong direction.

‘And while April’s poor weather – which delayed work on many building sites – might explain the sharp drop in that one month, April was no anomaly. The less volatile quarterly measure of output also shows a 2.2% contraction – the sixth time in a row it has been stuck in reverse.’

Overall, the services sector, which the finance sector falls into, has grown by 0.9% in the last three months, with 11 out of the 14 sub-sectors experiencing growth in this time. Although, nine of the 14 contributed to its 0.2% growth in April.

The information and communication sector was the highest contributor within the services sector with 2.3% growth for the month due to a 3.2% rise in computer programming, 1.7% in telecomms and 4.9% in publishing activities.

Manufacturing took a blow with a 0.9% drop, only prevented from falling further due to growth in water supply, mining, electricity and gas supplies.

As for the construction sector, there was another negative month of GDP figures with a drop of 1.4%, in total over the last three months it has decreased by 2.2%. This was heavily influenced by significant drops in new work, and repair and maintenance services.

Nellis said: ‘The data shows that the UK economy is still in a precarious position and we remain sceptical about the affordability of major tax cuts, with so many potential bumps in the road in the second half of the year and beyond.

‘Whoever picks up the keys of 10 Downing Street on July 5 will have to face up to the reality of an economy that while no longer in crisis has some significant challenges ahead.’

Economists had predicted a poor month so the figure was not unexpected.

Nicholas Hyett, investment manager at Wealth Club, added: ‘The market had low expectations for the UK economy in April, and it duly delivered.

‘Economic growth was flat, held back by a third month in a row of contraction in the construction industry and weakness in the manufacturing sector. After strong growth in March, it’s a return to a less than compelling trend.

‘In an election month, where every data release will be being watched closely, there’s little here to change the narrative.’