Pre-budget jitters lead professional and business services output to flatline

Despite a busier-than-usual summer, the UK’s professional services sector has lapsed back into its long-term slump in the autumn. New data from the sector suggests the sector saw no output growth over the period, amid the uncertainty around the budget.

Chloe Austin, senior analyst in professional and business services for the UK at RSM, commented, “October saw decreases across the board for output in the professional services sector, which was largely driven by pre-budget jitters prompting businesses to put a pause on activity. While the legal and accounting sectors saw an increase in turnover, against the fall in output, this again points to price inflation as opposed to real productivity gains.”

The Index of Services had suggested in August 2025 that professional services sustained a 6% year-on-year increase for their turnover. Summer is traditionally the slow period of the year for consultants, accountants and the legal sector, before a spike in activity from September onwards – so outperforming annual figures in August could have been seen as a sign that the sector, which has endured sluggish growth in recent years, was finally turning a corner.

The latest figures from the Index of Services suggest that optimism has been short-lived, however. Professional services saw output growth of 0.0% in the three months to October 2025, and while that is still a more positive message than the 0.1% decline the UK’s GDP suffered over the same period, it comes at a time when firms most expect to push ahead with new projects.

Examining the turnover of services industries data, the ONS found a 3.1% decrease in revenues for the three months to October 2025. Within this, professional services turnover fell 3% month-on-month in October. This was largely driven by decreases in scientific research and development and architectural and engineering activities. There were some bright-spots though: with legal and accounting revenues up 8% and 4% respectively.

Austin added, “For legal in particular, revenues saw a 5.6% rise in the three-month period to October when compared to the previous year. This is impressive on the back of a 17% monthly decline in August and will likely fuel further private equity interest in the sector.”

Looking ahead, Austin asserted that the sector was likely to see a slow end to the year – with “budget uncertainty and speculation really ramped up” by Chancellor Rachel Reeves’ autumn budget. Not all of it may be bad news, but some of the choices may put further pressure on clients to postpone projects, she noted.

“There was some good news in the budget for professional services firms given there was no mention of National Insurance contributions extending to partners’ profits. However, tax changes around dividends and employee ownership trusts will require some firms to reassess their models and consider whether they remain appropriate for remuneration and succession planning.”