Professional and business services

The UK's accountancy and legal sectors are world leaders, management consultancy is growing swiftly, and the UK is home to internationally- renowned architects, human resources, financial, business and strategy firms that make up the professional and business services sector.While there may be a temporary uptick in demand for some professional and business services companies as a result of leaving the EU, the economic health of the client base is paramount to the world-leading professional and business services that the UK offers. Latest surveys show optimism among firms in the UK service sector has fallen this quarter, as rising costs and sluggish volumes of business have led to a drop in profitability [1] . As the clients of professional and business services companies span every single sector, the prospects of businesses in this industry are closely linked to whole-economy growth. However, the reverse is also true – where professional and business services thrive, so do their clients. For example, where UK services expand abroad, so too do UK goods firms, with a better chance of offering inputs.Many of the costs professional and business services cite as a concern as a result of the UK leaving the EU are opportunity costs – particularly if the single market in services develops further.

Key stats

  • 5.8 million employees
  • £204.4 billion GVA (12.3% of total GVA)
  • £70.5 billion exports
  • £40.4 billion imports
Trade and Regulation: Barrier-free access to the EU market in services is linked to regulation and is important for the sector's growth

EU membership currently allows professional and business services companies in the UK to establish and offer services in any other EU country. This has come through breaking down complex regulatory barriers such as national limitations on the number of sellers in the market, restrictions on levels of foreign ownership and forms of commercial entity. The removal of these barriers is particularly advantageous for small businesses, who offer their services through phone, email and physical meetings to EU clients.

There are concerns that if no deal with the EU is secured which covers services liberalisation, the UK's professional and business services industry will face the restoration of these obstacles. If the UK is not treated preferentially compared with the rest of the world, numerous regulatory measures designed to discriminate against "foreign" firms may be restored. These could impose additional costs on UK firms – such as the imposition of additional requirements for supervisory approval in several jurisdictions – or remove access all together – for example through exclusion from public procurement procedures.

Migration: International skills and flexibility of movement support growth in professional and business services

The professional and business services industry is a people industry, where human capital is their greatest strength. It is also mobile, with its people moving across sectors and countries, bringing the innovation and high standards that give companies a competitive edge. Continued access to high-skilled workers and simple systems of intra-company transfers – without limitations on stays – is one of the leading priorities of the professional and business services sectors.

International: The international reputation of the UK is important to this sector

In a global marketplace, competition for business is fierce. The UK's reputation as a world-leading provider of services will be important to maintain. Additionally, any advantages the UK's professional and business services could secure through new international trade agreements could provide an edge.

Our members say

"A number of our transactions were put on hold whilst funders and investors waited to see how Brexit was panning out. A number – but not all – have come back on recently." - medium-sized UK-based legal firm

"We're paying close attention to the rhetoric around immigration. Imposing the lengthy process required to hire the best and the brightest from outside the EU onto EU hires would be frustrating and expensive." - multinational accountancy firm with over 10,000 UK employees

"As a service provider and an employer of talent from across the EU to clients who are dependent on the single market we benefit greatly from the single market for services." - leading international legal practice

For professional and business services at the CBI, contact: Lara Robinson on 0207 395 8040 or Lara.Robinson@cbi.org.uk


References

[1] CBI, November 2016 Services Sector Survey

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