Law firms in the United Kingdom have continued to struggle in the third quarter of 2009, with more pain to come, according to research by the UK business organisation, Confederation of British Industry (CBI).
The CBI's quarterly Service Sector Survey has revealed that the UK Business and Professional Services industry, covering legal, accountancy and marketing firms, experienced a decline in the both the volume and value of business, with 48 percent of firms surveyed reporting a fall in profits, which was compounded by weaker sales and widespread discounting of services.
This was against market expectation, which had predicted a mild strengthening in the sector, building on modest growth in the previous quarter.
"For firms operating in business and professional services, conditions look set to remain challenging. In the next quarter sales, profits and employment are expected to decline again, but at a slower rate," quoted the survey, released on Monday.
This is likely to be fueled by a continued cutting of prices, with a majority of respondents having discounted services in the third quarter, and a majority of firms also expecting the downward trend to continue into the next quarter.
"The recent weakness in the service sector is disappointing, particularly as business and professional firms had hoped conditions would strengthen this quarter. This... underlines the fragility of the economic recovery," said CBI chief economic adviser, Ian McCafferty, in a statement.
The survey also showed a continued trend of employment and training cutbacks, and a reluctance to make investments due to uncertainty about their business prospects.
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