Deloitte warns on ‘challenging’ conditions despite £1mn partner pay

Deloitte’s UK and Switzerland operations have warned of continuing “challenging” conditions in the UK this year, even though partners at the Big Four accountancy firm took home an average of more than £1mn for a third successive year.

Partner pay stayed flat year on year, at £1.06mn, because of a rise in the number of partners sharing in profits at the firm, Deloitte said. Partner numbers rose from 672 to 714. Distributable operating profit for the year to May 31 rose 6 per cent to £756mn, on revenue up 14 per cent to £5.6bn, Deloitte added.

Deloitte is the only one of the Big Four firms — which also include EY, KPMG and PwC — that has reported average profit per partner higher than £1mn in its most recent UK results. Deloitte’s figure for 2021 also reached about £1mn, after taking into account a one-off £200,000 average gain per partner for the sale of a restructuring business to Teneo, a private-equity backed professional services group.

Richard Houston, the chief executive of Deloitte’s UK and Swiss operations, said performance in the first half of the financial year had been “strong” but there had been some “softening” in the second half. Revenue growth for the second half has been about 9 per cent, the firm said.

However, Houston warned that the year to May 31 2024 would probably be more difficult.

Referring to the firm’s announcement earlier this month that it planned to cut 800 consultancy jobs in the UK, Houston said: “Markets are expected to remain challenging and, like any responsible business, we have adjusted our plans in response.”

He added: “The UK faces a challenging year, with ongoing cost of living concerns, slow economic growth, rising geopolitical tensions and the climate crisis”.

EY and KPMG have also this year announced plans for some job cuts.

Deloitte’s UK and Switzerland business is part of the wider Deloitte North and South Europe business, which covers much of Europe and the Middle East. The UK and Switzerland unit is obliged to reveal more about its financial performance than other parts of the worldwide Deloitte network, because of UK rules.

Revenue in the UK for the 2022-23 year grew 13 per cent, to £4.84bn, while revenue in Switzerland increased 20 per cent, to £772mn.

By sector in the UK, the strongest growth was in the core audit and assurance business, which recorded revenue growth of 20 per cent to £869mn. Revenue in consulting grew 16 per cent, to £1.6bn.

Houston said the firm’s financial services, energy and resources, and public sector teams had all experienced “significant demand”.