Deloitte UK affiliate salaries continue to rise above £1m

Deloitte's UK partners have made an average of £1,058,000 this year thanks to booming M&A advisory activity, but the boss of the Big Four has warned of "economic headwinds".

The figure topped last year's distribution by £8,000 but the 2021 result was helped by the sale of a company. This time, the company achieved a 21 percent increase in operating profit on a 10 percent increase in sales.

"Demand for all of our services has been strong, particularly in the areas of cloud technology, digital transformation and M&A," said Richard Houston, chief executive of Deloitte UK.

The deal boom made for an "extraordinary" year in corporate financial advisory, including pre- and post-M&A advice and corporate finance work, according to Deloitte. "We are entering the new financial year with momentum and are well positioned to master the current economic headwind."

However, Houston said that the year ahead is less certain as "the UK faces high inflation, rising interest rates and rising costs for the first time in recent history".

His comments follow a similar warning from UK PwC chairman Kevin Ellis, who told his firm's partners that rising costs would reduce payouts in the coming year. PwC's UK partners' distributable profits averaged £1,025,000 this year, including £105,000 from the sale of a business.

At Deloitte, revenue from its financial advisory business rose 24 per cent to £501m by the end of May, not counting the impact of last year's sale of its restructuring business to Teneo. Overall, revenue from the UK advisory business - which includes risk, tax, legal and general advice - rose 11 per cent to £3.6 billion.

UK auditing revenue rose 9 per cent to £723m.

Deloitte has publicly announced its business model of combining consulting and auditing services under one roof, while competitor EY is preparing to question its partners about splitting the two.

Deloitte said growth was "balanced" over the past year. The advisory business has been fueled by a post-pandemic upswing in corporate investment, while the risk advisory business has been fueled by companies' need to address rising environmental, social and governance concerns, as well as cybersecurity.

Deloitte's total UK and Swiss revenues, reported together, reached a record £4.9bn and distributable operating profit of £711m, also a record. The company has 672 equity partners.

Amid rising inflation and stiffer competition for staff, the company says it has increased salaries and bonuses over the past year, resulting in a £400m payroll increase. In addition, the annual salary increases were brought forward by three months.

According to the firm, 4,500 new staff joined the firm last year and 124 staff in the UK were promoted to partner at the start of the current financial year.