KPMG's 600-Job Cull: When Profit and Headcount Can't Both Keep Rising

• KPMG UK is cutting close to 600 roles — roughly 440 assistant-manager auditors and 120 advisory staff — as low attrition bloats its junior bench and client pipelines stay thin.

• The firm delivered a strong profit result (£576mn PBT, +14%), but that improvement was driven almost entirely by cost-cutting, not revenue growth.

• The Big Four face a structural reckoning: a post-pandemic hangover in consulting demand, AI disrupting traditional advisory work, and a UK market that shrank in 2024 for the first time since lockdown.

What happened

On 25 April 2026, KPMG told UK staff on a hastily convened call that approximately 440 assistant manager roles in its audit business were at risk of redundancy, out of a total of around 590 positions under consultation. Separately, the firm's advisory arm is cutting roughly 120 roles, primarily in enterprise risk, with more potentially to follow. KPMG employs about 16,700 people in the UK, so the cuts affect close to 3.5% of the total workforce. The audit consultation is expected to run until mid-May 2026.

Context & data

• UK consulting market contracted in 2024 for the first time since the pandemic. Source Global Research estimates the market fell 3.4%, from £15.4bn to £14.9bn. The MCA's broader measure (which includes more firms) held flat at ~£20.4bn, but even that body's members entered 2025 forecasting their lowest growth since COVID. As of early 2026, the MCA projects ~5.7% growth for the year — a recovery, but far from a rebound.

• KPMG's advisory arm contracted 3% last year, mirroring declines across the consulting divisions of EY, PwC, and Deloitte. Overall UK firm profit before tax rose 14% to £576mn for the year to September 2025 — but that improvement was driven by cost discipline, not revenue momentum

• Partner pay hit a 10-year high relative to peers. UK partners averaged £880,000 for the year to September 2025, up 11%, and ahead of PwC and EY counterparts for the first time in over a decade — even as the equity partner pool shrank to its smallest in 20 years.

• The audit cuts are unusual. Big Four redundancies typically spare audit, given its relatively stable, mandated nature. The culprit here is near-zero attrition — partly driven by foreign employees on KPMG-sponsored visas who cannot easily move elsewhere. PwC cut 175 junior auditors last year, signalling this is a sector-wide dynamic, not a one-off.

• AI is reshaping demand in real time. Source Global Research found that over half of consulting clients consider AI expertise a "very important capability" over the next three years, and more than 70% plan to allocate 20–40% of total consulting spend to AI adoption. Tech consulting is forecast to grow 6% in 2025 and 7% in 2026 globally — but that spend is not automatically flowing to incumbent Big Four practices.

  
  

My take

From a PE lens, what strikes me most about KPMG's situation is that the headline profit improvement is a margin story, not a growth story. Cutting the equity partner pool, freezing promotions, and culling headcount can only go so far — and the fact that the firm is now resorting to audit redundancies, historically the most stable part of the business, tells me the structural demand picture is genuinely difficult. The advisory business contracting 3% in a year where the broader market was flat (at best) is a market-share problem as much as a macro one. The enterprise risk practice — where most of the advisory cuts are landing — is a segment under pressure from two directions: clients bringing governance and compliance work in-house, and AI tools starting to automate the more routine risk-framework engagements. That's a structural threat to what has historically been recurring, repeatable revenue.

The profit-per-partner story is almost jarring against the backdrop of the redundancies. Squeezing margins by cutting junior staff and shrinking the equity pool raises a legitimate question about the long-term talent pipeline. Junior auditors and consultants are where institutional knowledge is built; if the bench is systematically culled whenever the market softens, you risk arriving at the next upcycle without the trained capacity to capture it. The AI pivot is real and necessary, but retraining a workforce built on traditional audit and risk advisory models is expensive and slow. I'd want to understand how much KPMG is actually investing in upskilling versus simply shrinking its cost base — and right now, the evidence points more to the latter.

Risks & watch-list

• AI disintermediation. AI tools are starting to absorb the junior-task load — data gathering, risk-framework drafting, compliance checklists — that has historically justified large associate headcounts. If that accelerates, the current restructuring may not be the last round.

• Public sector pipeline. The Labour government has pledged to reduce consulting spend across Whitehall. The public sector is consulting's second-largest client segment, and any material reduction would disproportionately hit the Big Four, which dominate government advisory mandates.

• Talent attrition at the top. Jonathan Holt narrowly missed the global CEO role this month. Key leadership transitions at firms of this complexity can create internal uncertainty at exactly the wrong moment in the cycle.

• Regulatory and reputational risk. KPMG is still in the shadow of the FRC's record fine over its Carillion audit. Cutting junior auditors while partner pay reaches record highs is not a good look — and heightened FRC scrutiny of audit quality remains an ongoing exposure.