We’re now just over half way through the year and what a turbulent six months it’s been for public practice so far.
Being a seasonal sector with busy tax seasons and slower holiday periods, there’s a natural wave of change that is to be expected.
What is harder to navigate however are the wider economic decisions that reshape the market.
We’re talking things like a rise in mergers and acquisitions, where separate entities are coming together to create large firms, instilling uncertainty and impacting talent retention and recruitment.
Another big one is the general election. Whilst it’s no surprise that an upheaval of the government will have ripple effects across all business sectors, it has left businesses speculating what the outcome could mean for them.
With Labour now settling into number 10, it’s only a matter of time before we see notable differences to the way companies operate.
At the end of each quarter, we’re looking at the current state of the market and how we believe the following quarter could play out.
From our established market presence across the UK, we’re able to see how the challenges and opportunities of this turbulent sector impact both accountants and firms.
Can Starmer Strengthen Economic Sustainability?
Not too long ago the consensus across the sector was that the Spring Budget fell short. There was a lot of talk about building long-term economic growth but no clear plan to make it a reality.
The budget seemed to lack concrete steps and actionable strategies, leaving many within public practice feeling uncertain about the future.
Will this change under new leadership?
With the recent change in government, there is cautious optimism that these shortcomings will be addressed.
The new leadership under Labour is expected to bring a different approach to economic policy and we’re already seeing a call from sector leaders for the new government to act quickly in relation to proposed tax changes.
There’s a sector-wide plea for a tangible plan to help increase businesses’ scope for investment in a bid to strengthen the economy.
Starmer’s policies as outlined by the Labour Party aim to strengthen economic sustainability through several key initiatives, one of which involves introducing a new fiscal lock.
In essence, it would ensure any permanent changes to government tax and spending are subject to independent forecasting, aiming to provide economic stability and predictability for businesses and families.
Another plan is to introduce a genuine living wage and provide free breakfast clubs in primary schools to support families and improve overall economic participation. The goal is to address income inequality and ensure that economic growth benefits a broader segment of society.
Other initiatives proposed by Labour include tax reforms that will generate additional revenue to be used to enhance public services, such as the NHS and education. This includes a strategy to reduce NHS waiting times, improve local healthcare, and increase the number of healthcare professionals.
Whilst some of these proposals don’t directly relate to public practice, significant changes to policies will have an impact to the wider economy and influence the spending habits of businesses and the priorities of workers. These bigger picture shifts will have a lasting effect on recruitment for all sectors, including public practice.
How has the market changed since Q1?
The skills shortage continues, technology remains a top priority for leaders, and regulations are ever-evolving.
So, has anything changed?
From working closely with candidates up and down the county, we’re seeing a few key trends that we believe are shaping the current market:
- Firms are promising the world: In an attempt to retain talent, we’re hearing more and more that firms are promising their staff things like pay rises, professional development opportunities, and progression. But, firms aren’t living up to their word. The frustration from this growing trend is palpable and candidates are looking for new opportunities with firms that can meet expectations.
- Candidates are standing their ground: Something we’ve noticed over the last year or so is a rise in candidates rejecting job offers. Whether it’s because the pay came in too low, there wasn’t enough flexibility, or the candidate simply didn’t feel like it was the right fit for them, firms are missing the mark. We’ve seen cases where firms offered £1-2k less than the candidate’s desired salary, they refused to budge, and ultimately lost out on that candidate. The result: they were back to square one. To secure top talent, firms must show intent.
- Mergers are influencing recruitment decisions: For staff, mergers often bring uncertainty and potential redundancies, affecting morale and job security. Merged firms may also create new structures or business priorities which staff may not like. Firms that are securing PE backing, for example, may no longer be appealing for staff with their sights set on equity partnership. For firms, it’s likely that recruitment drives will be paused during and shortly after the merger process.
What opportunities lay ahead for Q3?
The challenges faced in the past six months have highlighted the sector’s resilience and adaptability. Firms have demonstrated their ability to navigate through economic uncertainties, regulatory changes, and shifts in client expectations.
This resilience is a testament to the sector’s robust infrastructure and the dedication of its professionals. Despite these challenges, it’s not all negative. There are also notable opportunities within public practice.
As we move into the next quarter of the year, firms need to remain agile and responsive to the dynamic market conditions.
The ability to quickly adapt to changes in the economic environment, regulatory landscape, and client needs will be essential for success.
Key areas of focus will include adapting to the new government, leveraging technology to drive growth, maintaining flexibility in work arrangements, and staying compliant with regulatory changes.
By addressing these areas, firms can navigate the challenges of the public practice market and capitalise on emerging opportunities.
When it comes to building an effective recruitment strategy in the current landscape, firms must lean into market knowledge.
By working with a trusted recruitment partner like Public Practice Recruitment Ltd, you can benefit from our established market presence that enables us to provide expert market knowledge. Not only that, but you’d be able to tap into our extensive network of talented candidates across the country.
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