3,000 jobs lost in top 50 firms as recession hits financial services

The number of qualified accountants employed by the top 50 firms has fallen by about 3,000 – or about 5% – over the past year, in one of the clearest indications yet of the recession’s impact on the profession.

The UK’s top 50 firms by revenue employ 56,669 qualified accountants, down from 59,695 in 2008, according to Accountancy Age’s annual survey.

Experts expect the job cuts to continue as firms try to slash costs in response to a sharp slowdown in demand for corporate finance and other services.

Last week, KPMG said it would cut UK tax jobs despite the introduction of a four-day working week in an effort to reduce costs. The Big Four firm blamed a slump in the corporate finance market, although it said other parts of its tax practice, such as VAT and transfer pricing, were seeing good growth.

An industry source said that about 200 jobs could be cut. A spokesman for KPMG confirmed that it planned to cut jobs in its UK tax practice and was consulting staff about the redundancies.

Phil Shohet, director of Kato Consultancy, which advises accounting firms, predicted that over the next year the top 50 firms may have to cut a similar number of jobs or more.

He added that firms were cutting swathes of management and larger firms were still recruiting graduates – echoing a tactic used during the recession of the early 1990s.

This has forced partners to ‘trade-down’ and handle more technical work, Shohet said, meaning that clients are often relying on inexperienced graduates to help them survive the recession.

‘You need more rounded managers who are technically very good, but who can also manage staff better,’ he said. ‘In independent firms there is very little management training.’

The ICAEW urged firms to resist cutting training in the push to reduce costs. A spokesman said: ‘We know that firms that don’t train their staff are far more likely to have problems later on, whereas those that invest in developing the talents of their employees are much better placed to weather tough times.’

Thousands of redundancies in financial services have cut the amount of advisory work on offer, while merger and acquisition activity has also slowed dramatically.

Finance departments have been hit, too. Research published last month by recruitment consultant Robert Half found that UK finance professionals have been hit harder by the downturn than counterparts in other leading financial centres, as companies lay off staff to cut costs.

View the entire Top 50 and +50 survey as a pdf document