Dusseldorf According to the forecasts of the economic researchers, the German economy will grow by around three to four percent in the new year – despite the pandemic and the ongoing shortage of materials in the commercial economy. These two disruptive factors affect most consultants comparatively little – and so 2022 should be another record year for the legal, tax and auditing branch. This is signaled by the Ifo advisory climate that the Munich economic research institute calculated for the Handelsblatt.
Around half of the consultants surveyed are currently reporting a good business situation; hardly any of them are dissatisfied. After the turbulent but nevertheless good year 2020, the year 2021 went noticeably better. The peak was reached in September; Since then, sentiment has fallen slightly, but it is still at a high level.
“The consultancy branch is robust against the recessive tendencies in industry and consumer-related service providers,” says Ifo expert Klaus Wohlrabe, summarizing the survey results. Compared to the economy as a whole, the consultants are “very well positioned”. The business climate – i.e. the balance between optimists and pessimists – is more than 20 points higher.
In practice, the good business situation often means stress. “The profession still has its hands full,” reports Torsten Lüth, President of the German Association of Tax Consultants (DStV). Corona continues to dictate everyday work. It was recently announced that the application deadline for “Bridging Aid III Plus” would be extended to the end of March 2022. Then the corona aid would be continued through the “bridging aid IV”.
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Finally, the final accounts for the past aid programs would have to be drawn up. “So there are no breaks,” says Lüth. The situation is also emotionally challenging: “The distress of the clients is sometimes enormous. That also depresses us as consultants very much. ”In addition, the property tax reform has to be“ jacked up ”in addition to normal day-to-day business.
Consultants are planning price increases
The sales development is pointing upwards for many consultants. Almost 40 percent were able to increase their sales compared to the previous year at the end of the year, while 25 percent reported a decline in sales. For the coming months, 57 percent of the companies expect constant sales, around 38 percent expect increasing sales.
A significant part of the increase in sales is due to price increases. Around 40 percent of companies are planning price increases. “The market seems to be able to do that”, analyzes Wohlrabe. Despite “intense competition”, price reductions are almost never planned. “The consultants join the concert of price increase announcements in the German economy,” said the Ifo expert.
In the past year, an almost unprecedented price avalanche rolled across Germany. While inflation was still minus 0.3 percent at the end of 2020, it soared to 5.2 percent in November – December data will be reported on Thursday. For 2022, economists expect at best a gradual relaxation, which would not imply price reductions, but rather somewhat slower price increases.
“Sales in the audit business are largely stable, and a cautiously positive development is also expected for the coming audit season,” confirms Melanie Sack, executive board member of the Institute of Auditors (IDW). The consulting business shows the strongest momentum. This year, for example, the topic of sustainability will be given significantly more weight. Because Brussels is expanding existing rules on non-financial reporting considerably, so that there is a need for both advice and auditing. “In addition, the industry continues to advocate an unconditional clarification of the Wirecard fraud case,” affirmed Sack, who considers the current image of the auditors in parts of the public to be “negatively exaggerated”.
Hardly anyone wants to cut staff
The situation is very different within the legal profession. “The pandemic was and is an accelerator for digital change,” explains Sylvia Ruge, General Manager of the German Lawyers’ Association (DAV). “That is why we are looking to the new year with confidence in the area of management consultancies.” The subject of corporate restructuring could definitely pick up speed in 2022 – because there are not all winners.
With a view to consumers, the negative effects of the pandemic on the legal profession are still noticeable. “People are busy with all sorts of things, but have less power to clarify legal questions when it is not absolutely necessary,” says Ruge. The widespread short-time work also unsettles many who might have dared a legal dispute. The “standstill” on the housing and labor market also had an impact on the mandates.
A foreseeable shortage of skilled workers combined with favorable business prospects means that the consulting industry is still looking for employees. Almost a third of the consultants want to hire new staff in the coming months, and almost two thirds would like to keep their workforce constant. Just under five percent are thinking of downsizing.
“With regard to personnel development, the positive development of the past few years continues,” emphasizes Ifo expert Wohlrabe. Overall, the number of employees in the industry will continue to rise, even if the number of skeptical voices has recently increased somewhat in the wake of the current corona wave.
More: This is how the German economy will develop