The latest figures from the Management Consultancies Association reveal that its members, who represent two-thirds of the UK consulting industry, saw 16% growth to £5.4bn in 2006. The whole of the industry is estimated to be worth £7.7bn.
MCA chief executive officer Peter Hill said a year of healthy growth had been achieved through expansion in the financial stature of the capital city.

‘London’s growth in its financial stature has drawn activity away from other financial centres and has fuelled investment in IT,’ said Hill.

Financial services consulting work was one of the fastest growing sectors, increasing by 31% to £1.1bn. Efforts to improve IT in the financial services industry saw the service line post strong figures. IT consulting as a whole grew to £1.5bn, up 24% on 2005.Financial management consulting, an area the big accountancy firms are trying to break into, boomed, up 28% to £415m in 2006.

The report said regulation had been the clear driver here with many organisations still working through the systems and process implications of compliance. However, although more changes are on the agenda, this is now a comparatively mature market and one that many firms expect to have peaked.
Consultants did not see growth across the board. The public sector, which has fuelled a boom in consulting services in the 21st century, saw growth stagnate to single figures. The market was worth £1.6bn, a 5% increase on 2005.

Hill said there had been concern in the market about the explosion in focus on the public sector market.

Other high performing sectors included manufacturing and construction, which grew 49% to £578m.

The growth was due to demand for work in electrical engineering, pharmaceuticals & biotechnology, and consumer products.

The war for consulting talent intensified during the year. MCA members collectively employed over 18,000 fee-earners, an increase of 26% on 2005. Con sulting firms, despite their recruitment spree, warned that a shortage of good staff was still the biggest problem facing the industry.