Growth in number of deals facilitated by the top 50 City law firms went into reverse during the course of 2014, according to a report published today – a possible early indicator of a slowdown in economic growth. 

The Law Society/Legal Monitor City Legal Index shows that the total number of deals increased by 7.1% between January-June 2014 compared with the same period in 2013, but fell by 2.3% between July-December compared with the last six months of 2013.

The average value of deals increased slightly over the course of 2014, but it was 10.6% lower than 2013.

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% in 2014, having increased by 32.3% in 2013.’

The report cites the finance and banking, and fund/investment management industry sectors as the main sources of the slowdown in the number of deals.

The number of deals in the finance and banking sector in 2014 fell 3.4% lower than in 2013 – whereas deals grew by 19.8% in 2013 compared with 2012.

In fund/investment management the number of deals in 2014 was 0.6% down on 2013 – whereas deals in 2013 grew by 7.3% compared with 2012.

On a positive note, the number of technology, media and telecoms deals increased by 13.5% in 2014. Energy and utility deals increased by 22%.

The Law Society/Legal Monitor City legal Index tracks publicised business deals facilitated by the top 50 UK law firms, providing a gauge of City firm input into the wider economy.