UK profit warnings soar to two year high ahead of autumn Budget

The number of profit warnings issued by UK-listed businesses reached a near two-year high in the recent quarter, according to newly published figures.

Research from advisory firm EY indicates that domestic companies have come under pressure from growing costs and weak consumer confidence ahead of the initial Budget since Andy Burnham’s appointment as prime minister.

The advisory group's latest profit warning report revealed that 65 public firms issued downgrades in the three months to the end of September.

This is an increase from 59 during the previous quarter, marking the highest figure since the final three months of 2024, when 71 warnings were released.

Geopolitical instability and policy shifts were identified as the primary drivers of profit warnings, featured in 54 per cent of cases over the third quarter.

Meanwhile, 38 per cent of the notices explicitly cited the fallout from the ongoing conflict in the Middle East.

More than a third of warnings, 35 per cent, cited rising costs as a leading factor, pointing towards inflationary pressures and higher business costs weighing on firms.

Almost a fifth of list companies, 17 per cent, have issued at least one profit warning over the past 12 months.

Jo Robinson, EY-Parthenon partner and UK&I financial restructuring leader, said: “The latest figures show the variety of structural changes and challenges that companies are currently navigating.

“This is not a conventional economic cycle.

“For much of the post-war period, the economy followed a familiar demand-led boom-and-bust pattern but, since the pandemic, supply-side disruption including material and labour shortages, energy shocks, tariffs and wider geopolitical disruption has become far more significant.”

The data comes less than two weeks ahead of the autumn Budget, amid calls from industry for the government to avoid business tax increases following cost pressures linked to recent budgets.

Ms Robinson said: “With the autumn Budget around the corner, profit warnings linked to policy change and uncertainty – once concentrated around fiscal events or elections – have become a regular feature of our data.

“Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder.”