Forecasts of legal services sector: real turnover and net exports
The Law Society's short-to-medium term forecasting model for real turnover in the legal services sector is based on six main economic drivers of growth:
- the performance of the UK business sector measured by its real profits
- households' real disposable incomes
- housing transactions
- the unemployment rate (as a proxy for crime rates and social deprivation)
- financial sector output
- net exports of legal services in real terms
The forecasting model does not explicitly take into account longer-term factors that could also affect real turnover such as: increasing competition, technological change, more flexible working practices, or the increasing importance of other jurisdictions. Therefore, although the model is run up to 2030, the longer-term forecasts should obviously be treated with some caution.
The backdata on turnover is from the ONS's Annual Business Survey (ABS), and are converted to 'real' terms using the ONS's legal services producer price index
The Law Society's short-to-medium term forecasting model for real net exports of the legal services, which feeds into the forecasts of real turnover, is based on 3 main economic drivers of growth:
- average GDP in the advanced economies
- average GDP in the emerging economies
- the pound sterling exchange rate (weighted average against the US$ and €)
The backdata on net exports is from the ONS's Supply and Use Tables (SUTs) figures on exports of legal services minus imports of legal services, and like the turnover figures, are converted to ‘real' terms using the ONS's legal services producer price index.
The real turnover and net exports forecasts are for the total legal services sector ie solicitors + barristers + other legal services providers.
The forecasts for the UK macroeconomic variables that feed into the models are those produced by the National Institute of Economic and Social Research (NIESR). The forecasts for GDP in the advanced and emerging economies that feed into the real net exports are IMF forecasts.
The latest August 2014 forecasts of legal services sector real turnover and net exports are based on NIESR May 2014 and IMF April 2014 macroeconomic forecasts.