Lower number of deals in City Legal Index could indicate GDP growth slowdown in 2015
Data out today from the Law Society/Legal Monitor City Legal Index shows a further slowdown in the number of deals facilitated by the top 50 City law firms.
Law Society president Andrew Caplen said:
"Legal deals can be an indicator of future growth in the economy as a whole in the six to nine months ahead. It seems that the strength of the pound against the euro and the dollar and slower than expected growth in overseas markets are taking their toll on exports, as deals in manufacturing have plummeted by 15.4 per cent in 2014 having increased by 32.3 per cent in 2013."
The main findings of the latest Law Society/Legal Monitor Legal Index are:
- Deals decreased by 2.3 per cent in July to December 2014, compared with the same period in 2013. For 2014 as a whole, deals increased by 2.2 per cent compared with 2013.
- The main source of the slowdown is the number of deals in the financial sector. Deals in the Finance Banking sector in 2014 were 3.4 per cent lower than in 2013, and in the Fund/Investment Management sector 0.6 per cent lower
- Manufacturing sector deals fell by 15.4 per cent in 2014. There was also a significant slowdown of deals in the Real Estate Construction sector in 2014.
- The number of deals in the Technology, Media Telecoms and Energy Utility industry sectors grew significantly in 2014, reflecting a return to their longer term pattern of growth following a downturn in both these sectors in 2013.
David Kekwick, Director at Legal Monitor said:
“The Law Society/Legal Monitor index reflects the slowdown in UK GDP growth that we experienced in the last two quarters of 2014. The significant reduction in the price of crude oil that we have seen over the last few months is already having a significant impact on oil and gas exploration investment and acquisitions in the energy sector. This could weigh heavily on the index in the first half of 2015. In contrast the reduced price of crude should benefit UK manufacturing industry and help to stimulate consumer activity.”
