Firms invest in good times for the long term

Far from being damaged by the introduction of new regulation and a clampdown
on avoidance, firms appear to have thrived on the obstacles thrown in their way.
As governments reacted to corporate events, they could hardly have anticipated
that they would be making the firms and their partners richer.

But the trouble with revenues driven by regulation is that they have a short
lifespan. The initial introduction of new rules brings in the money, but once
the dust settles, the cash dries up. Does that mean a bleak future for firms?

Certainly not in audit, where prices have risen, and tax, where the
government’s continued focus is requiring constant advice at a price. But there
are signs that the boom will not continue. Corporate finance has been buoyant,
but poorly performing stocks and a concern about debt markets mean that could
fade. And there are expectations that the global economy could take a dip, which
could have an effect on the accountancy sector.

Firms seem unfazed, though, and confident of good times ahead according to at
our optimism indicators. Around 80% say they will increase their partner
headcount, 90% intend to add to their professional staff numbers and 60% say
overall headcount is on the rise. You simply don’t recruit unless you feel
confident the business is going to be able to pay for it, and turn a profit.
That’s important because thing can go awry.

BDO Stoy Hayward and Grant Thornton, meanwhile, have been recruiting like
it’s going out of fashion, so confident are they that the business is there.
That kind of optimism is worth backing. But like all bets, a result is not

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