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Economic uncertainty starts to take its toll

“Never send to know for whom the bell tolls,” said the 17th century poet John Donne. “It tolls for thee.”

Our last couple of updates have focused on how an increasingly uncertain economic environment appears to be nudging down the rate at which the professional services market is growing. And to reiterate a point we’ve made in previous columns: We’re still forecasting growth in the second half of this year, but lower than professional services firms have been accustomed to during the pandemic.  

We can now put some more flesh on the bones of our argument, based on cross-referencing a variety of our client surveys that ask, among much else: What are the external issues most likely to prevent organisations from achieving their objectives, and thus most likely to result in lower levels of investment? Investment, in its turn, drives how much money client organisations are prepared to spend on external support. However, like most numbers about this complex, fast-moving industry, the results require some interpretation.  

The headline news is that the biggest threat to organisations’ ability to achieve their corporate goals is the threat of high inflation: Forty-seven percent of respondents said this is likely to have a negative impact, followed by 44% who pointed to the war in Ukraine. Lest we underestimate the lingering impact of the pandemic, 39% still say this is a significant problem for them, with a further 38% who are battling with the supply chain challenges that are the consequence of COVID. Geopolitical uncertainty and the threat of trade wars are a concern for around a third of clients.