E&Y joins Big Four billionaires

Big Four firm Ernst & Young is set to break the £1bn barrier in revenues this year, chairman Nick Land has predicted.

The landmark result will not affect the ranking of E&Y as the fourth largest accounting firm, as KPMG, which is third, has grown significantly.

E&Y reported 21% half-year growth, but KPMG earlier released figures showing a rise in income of more than 20% for 2004-5.

Land, who steps down in June, told Accountancy Age that a boom in transactions is now at least as important a driver of growth at the Big Four as regulatory changes. He said that regulation had been a key factor, but that the situation is changing. Asked which of the two was more important, Land said: ‘A year ago the answer was regulatory changes. Now I wouldn’t put one in front of the other.’

Regulatory changes had been widely credited with driving the huge growth in the Big Four this year.

‘Some of the anti-avoidance stuff in the last two budgets has ironically enough generated a lot of work, as companies have to look at undoing structures,’ Land added. Tax grew by 13%, the bulk of the growth coming in corporate tax advice, he said.

The firm took on 800 new people in the past six months. But Land said he would be surprised if that recruitment rate continued.

PricewaterhouseCoopers remains the largest accounting firm, with Deloitte second. PwC recorded 12% growth last year with a total of £1.7bn and Deloitte's figures showed 8.8% growth to £1.35bn (although interim results later showed 15% growth).