Number of UK accounting firms falls, ONS data reveals
The number of accountancy firms in the UK has fallen, while the number of bookkeepers has risen in the same period. A report from Float, the cash flow company, shows that between 2017 and 2019 the number of bookkeeping operations grew from to 6,640, an increase of 395.
Its ‘Accounting for change’ report, featuring previously unreleased Official Labour Market Statistics from the Office of National Statistics, also showed a net loss of 490 accountancy practices. This is in stark contrast to an average growth of 1,212 new accounting and auditing firms per year between 2011 and 2017.
The report reveals that the industry reached the end of a long-running growth phase prior to the Covid-19 pandemic, recently experiencing increased consolidation among smaller firms and disproportionate growth at the top end of the market.
The Float report also found that:
- Firms with a turnover of less than £100,000 decreased by 5.4% between 2017 and 2019, from 21,020 to 19,890. However, the number of accounting firms with a turnover of more than £100,000 increased by 4.3%, from 14,985 to 15,630.
- The partnership model has fallen out of favour in the last decade. In 2010, there were 3,125 accounting firms classified as a ‘partnership’, but this number has nearly halved (1,745 in 2019)
- The number of sole traders recognised by the ONS also reduced by nearly 3,000 (from 7,980 in 2010 to 5,150 today)
- By region, London has lost the most accounting and audit enterprises since 2017 (a total net loss of 325). Northern Ireland (+15), Yorkshire (+20) and South East England (+20) were the only regions with net growth.
“Accounting firms have demonstrated their immense value during the Covid-19 pandemic, helping struggling businesses stay afloat and informing them of their financial options. This is why many will be concerned to see the number of UK accounting firms in decline,” said Colin Hewitt, Float CEO and co-founder.
“However, it’s important to note that a lack of growth does not necessarily mean the industry is in poor health. The UK accounting industry now has a smaller number of more profitable accounting firms, following years of growth at the lower end of the market. This appears to have tailed off more recently, as we also saw increased market consolidation over the last two years which has contributed to a net reduction in firms.”
He added: “While accounting firms have seen a net decrease, bookkeepers remain in an accelerated growth phase. I’m not surprised since solid, regular bookkeeping is the cornerstone of any business’ financial data. We’re also in the middle of a technological revolution that represents an incredible opportunity for bookkeepers. Cloud accounting services, smartphones and the introduction of Open Banking mean bookkeepers can scale up like never before. Bookkeepers today can provide better, more efficient and more accurate services to more customers, thereby helping clients make better business decisions. Bookkeepers, just like their Accountant peers, have never been better or more important.”