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View from City Road: Catch 'em going, catch 'em coming

Thursday 18 August 1994 18:02 EDT
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Fresh from their success in advising the Government on privatising most of the family silver, the big six accountancy firms are now putting out feelers to the Labour Party - in order to win any future de-privatisation work.

It would be fitting indeed if exactly the same individuals who advised on the denationalisation of the water companies were to advise a Labour government on how to take the companies back into public owernship.

More realistically, a future Labour government may well want to clear up the mess resulting from the rail privatisation and the Post Office sell-off.

Accountants are increasing their inroads into areas formerly the preserve of merchant bankers and stockbrokers, for the simple reason that the profitability of their traditional business - auditing - has been shot to pieces.

The corporate finance divisions of the accountants have been dipping into these areas for years, but for the most part have insisted that they have not been competing directly with the merchant banks. They did not want to alienate a valuable source of referred business.

Now in these leaner times the gloves are off. But this City type of business requires new capital and incurs new liabilities. It is no coincidence that the two firms most interested in this work - KPMG and Price Waterhouse - are also the most interested in scrapping their partnership status in favour of incorporation.

Limited liability would allow firms to raise capital in the City and slug it out with the merchant banks and stockbrokers head on.

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