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“Any developments with private equity or the larger firms accessing capital markets will disturb the market even more, so you’ll have some people in those organisations that want to transfer to a different firm, and also some clients that think elsewhere would serve them better,” he said.

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EY member firms are set to vote on whether to split into separate audit and consulting arms early next year, with the consulting business set to float on the stock market.

Eagland said BDO was keeping its options open on a similar move, but had nothing definitive in the pipeline.

“We’re always engaged with the market, whether it is to attract new people, new teams, joint venture partners, merger partners, and people that have got capital, but as of today, it is just observing what’s going on, as opposed to planning for anything significant,” he said.

BDO has been on a recruitment drive in the last year, adding 1,000 new staff, taking headcount to 7,000.

The investment has hit profitability though. Average profit per equity partner fell 15% from £760,000 to £647,000 in the year to 1 July, the challenger firm said on 30 November.

Eagland said the firm and its partners had taken a decision to invest, despite the short-term hit to profits.

“The ultimate aim is that two-to-three years from now, when hopefully we come out of the recession, we’ve got those investments paid back for the long term, because you’ve got talent in your business,” he said.

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BDO’s new hires were driven by a desire to improve work-life balance for its staff post-Covid-19, as well as growing the firm’s revenue, Eagland said.

BDO boosted revenue 11% to £809m in the 12 months to 1 July, up from £731m the previous year. Profit before tax fell 8% to £187m, which the firm blamed on its investments and a return to pre-Covid cost levels.

Eagland said the firm was in a good position and forecast a steep increase in audit fees that he said could help weather the recession.

“We’ve got a good order book… and we also think that price is going to rise significantly in the audit area. For some businesses…you could see further increases of up to 50% on audit fees,” he said.

Eagland said he thought audit fees would rise because of a lack of capacity in the economy and because of the extra work it would take to audit businesses that lack governance and controls. For a “business that doesn’t have mature governance or very sophisticated controls including IT controls, the way the audit regulations are working out, is that you just have to do more work”, he said.

He also said that the firm remained committed to hiring junior staff, despite the looming economic downturn.

“When you come out the other side of the recession, the first thing someone says is, ‘I wished I hadn’t cut my recruitment’, and particularly at the trainee level, so we remain really determined to invest in young talent,” Eagland said.

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To contact the author of this story with feedback or news, email James Booth