Record proportion of profit warnings sparked by policy and global upheaval – EY
The worries were cited as a leading factor for 42% of UK-based businesses cutting their outlook for annual profits last year.
UK-listed firms issuing profit warnings have blamed policy changes and geopolitical uncertainty more than ever before, as they grappled with tariffs, tax hikes and fragile consumer spending, new analysis shows.
The worries were cited as a leading factor for 42% of UK-based businesses cutting their outlook for annual profits last year, according to EY-Parthenon’s latest report.
This was more than three times the 12% who said so during 2024, and the highest annual proportion recorded in more than 25 years of the analysis.
More than a quarter of firms cited regulatory and policy changes, while 15% of warnings were linked to US tariffs.
President Donald Trump’s tariffs on US imports impacted supply chains for some businesses, while certain sectors such as chemicals came under pressure from products in oversupplied Asian and Middle Eastern markets being diverted into Europe as a result.
Cost pressures were a significant driver of profit warnings last year, with labour-intensive businesses particularly affected by the rise in national insurance contributions and the minimum wage.
Meanwhile, others cited UK policies such as the Building Safety Act and the financial regulator’s motor finance compensation scheme as factors likely to push down on their earnings.
Nevertheless, 2025 saw the lowest number of profit warnings since 2021 – at 240 in total.
A profit warning refers to when a company that is listed on the stock exchange tells investors its full-year profits will come in below previous expectations, due to various factors affecting how much they will earn.
The other main driver of firms downgrading their earnings expectations was contract and order cancellations or delays, cited in a third of the total.
Business-to-business sectors such as software, industrial services and recruitment were hit hardest by uncertainty affecting sales, while consumer sectors were increasingly citing changing spending behaviour.
More than a third of all FTSE-listed retailers, including supermarkets, issued a profit warning during 2025, the report found.
Jo Robinson, EY-Parthenon’s financial restructuring leader for the UK and Ireland, said: “Our latest data shows that the pace of UK profit warnings has slowed, but this feels more like an uneasy pause than a turning point.
“Many firms continue to face a challenging and uncertain backdrop, with a record level of warnings referencing the knock-on effects of policy and geopolitical upheaval, including tariff-related impacts, autumn budget uncertainty, and employer national insurance contributions changes coming into effect.
“Much now hinges on what comes next: a bullish recovery where stability and falling interest rates boost confidence, or something more downbeat marked by slow growth and heightened volatility.
“With 2026 now well under way, these two contrasting narratives are finely balanced.”
