KPMG UK warns credit conditions could slow client deal activity

KPMG UK is flagging tighter credit conditions as a near-term drag on client deal activity, using the Bank of England’s Credit Conditions Survey - 2024 Q2 as the backdrop. The quarterly survey of banks and building societies was conducted from 28 May to 14 June 2024, and its results are based on lenders’ own responses, reported as net percentage balances.

That matters for KPMG’s deal advisory, restructuring and financing teams because credit conditions are often the fastest read on whether clients can still borrow on the terms they expected. When lenders turn cautious, the work tends to shift toward refinancing support, covenant analysis, liquidity planning and stress testing around working capital, rather than straight-ahead acquisition financing or growth capital.

Audit and tax teams also feel the effect quickly. Tighter funding conditions can feed straight into going-concern assessments, debt disclosures and management’s assumptions about future financing in audit files. On the tax side, changes in debt terms or capital structure can affect interest deductibility, transfer pricing and cross-border financing arrangements, which can add more review work for clients with complex funding structures.

The wider market signals were not limited to corporate finance. A related reading of the Q2 survey pointed to lenders expecting demand for home-purchase mortgages to fall over the summer, while remortgaging demand was also expected to soften in the coming months. That consumer lending backdrop matters for KPMG’s teams because mortgage and credit trends affect housing activity, household confidence and, in turn, broader client spending decisions.

The Bank of England published the quarterly survey results on 11 July 2024, giving KPMG teams a fresh mid-year snapshot of lender appetite. For partners and frontline managers, the practical use is immediate: the survey gives a concrete way to test whether a client’s financing plan still works, whether a refinancing is likely to be delayed, and whether a board should be preparing for slower transaction flow. In a market where financing is getting harder to secure, the next wave of client demand is likely to cluster around preserving liquidity before it returns to chasing growth.