Brexit anxiety helps UK consulting market hit £11 billion

The growth of the UK’s management consulting industry accelerated to 8% in 2019, propelling the market’s combined revenue beyond the £11 billion mark. Despite Brexit anxiety and political uncertainty, the year saw more than a third of firms exceed their growth expectations.

The UK’s management consulting sector has seen its growth ramp up for the second consecutive year, with its total revenues growing by 8.3% to an estimated £11.4 billion. This means the market is now worth almost £4 billion more than it was just six years ago, and has added close to £1 billion to that figure over the last 12 months.

The latest available data sourced from the UK’s representative body for consulting firms found that while the broader economy seems to be flirting with negative growth, management consultancies have seen demand buoyed by geo-political uncertainty and digital transformation. The results build on a similarly solid 2018, which saw UK's consulting sector accrue revenues of more than £10 billion for the first time.

As was the case then, the UK’s protracted exit from the European Union seems to have played a large role in the success of the consulting market. The MCA has long predicted that the consulting sector would be a key player when it came to the UK making a decent fist of post-EU life, and that prediction has been consistently proven to be the case, as clients continue to flock to advisory firms in search of their strategic and organisational expertise.

One third (34%) of firms exceeded their growth expectations in 2019, and Brexit will undeniably have played a role in this. Financial services and public sector projects continued to make up the lion’s share of the industry’s workload, and financial entities have tapped consulting firms to help plan for the future as London’s status as Europe’s leading financial hub seemingly hangs in the balance.

In the summer, meanwhile, the National Audit Office released figures showing the UK Government’s external Brexit-related consultancy spend had reached £97 million in 12 months – a government overspend of £32 million for the period.

However, while Brexit undeniably will have been a driving force in many of these cases, it is not the only show in town. A not-insignificant 40% of senior consultants may have told the MCA their firms had been engaged with clients preparing them for Brexit, but clients looking to leverage innovative new technology seems to have equally driven growth in consulting. In particular, the study found that the public sector is increasingly looking to digitise its services as a means of cutting costs and scaling important services to reach more users, faster.

Sustainability is a growing segment for consultants. More and more, firms are being asked by businesses to advise them on environmental and sustainability issues and around a quarter of consultants highlight sustainability as a key focus area for the industry in the coming years. A quarter of the more than 500 respondents in the MCA’s survey said the top trend driving this demand is reviewing business models for sustainability, while a further 22% cited identifying evolving customer sustainability expectations was important, and 16% said clients wanted help detecting risks with climate change.

Looking ahead, the association expects the industry to continue enjoying solid growth in 2020, albeit at a slightly lower rate. 76% of members polled expected consulting activity to increase in the next 12-24 months – a small fall from the previous year’s 86%. In line with this, the industry body forecasts 6% for the coming period.

“Our members are positive about the outlook for the next 24 months and are already heavily engaged with delivering the speed of transformation needed in both private and public sector organisations,” said Tamzen Isacsson, chief executive of the MCA.

She added that, in a year in which the UK redefines its position in the world, “it is imperative that, in partnership with government, consultants ruthlessly focus on boosting productivity, developing digital skills and securing UK's competitive position in the world as leader in professional services and data.”