UK profit warnings jump to highest since 2024 ahead of Budget

Profit warnings by UK-listed firms jumped to their highest level for almost two years in the latest quarter, according to new data.

Research by advisory firm EY indicated that UK firms have come under pressure from rising costs and subdued consumer sentiment ahead of the first Budget since Andy Burnham’s appointment as Prime Minister.

EY’s latest profit warning report showed that 65 UK-listed companies warned over profits in the three months to the end of September.

It represents an increase from 59 in the previous quarter and marks the highest reading since the final quarter of 2024, when 71 warnings were issued by firms.

The research found that policy change and geopolitical uncertainty was the leading cause of profit warnings in the third quarter, being linked to 54% of warnings.

Meanwhile, 38% of warnings specifically referenced the impact of the conflict in the Middle East.

More than a third of warnings, 35%, 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%, 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.”