The big four accounting firms face a threat to their dominance in the blue-chip audit market after Grant Thornton and RSM Robson Rhodes unveiled a merger plan to create the sector's fifth biggest firm by revenues.

It is the biggest merger in UK accounting since PwC, the profession's giant, was created in 1998 and comes as the big four's stranglehold is under scrutiny due to worries over its effect on fees, quality and financial stability.