The number of profit warnings from UK-listed companies rose to a near two-year high in the third quarter, with geopolitical instability and policy uncertainty cited as the main culprits, according to research by advisory firm EY.
Some 65 public companies issued earnings downgrades in the three months to the end of September, up from 59 in the previous quarter and the highest reading since the final quarter of 2024, when 71 warnings were recorded.
Geopolitical factors and policy shifts featured in 54% of warnings, while 38% explicitly cited the impact of the conflict in the Middle East.
Rising costs were flagged in 35% of cases, reflecting continued inflationary pressure on businesses, and almost a fifth of listed companies have now issued at least one profit warning in the past 12 months.
The data arrives less than two weeks before the autumn Budget, the first since Andy Burnham became prime minister, with industry groups pressing the government to hold back from further increases in business taxes.
Jo Robinson, EY-Parthenon's UK financial restructuring leader, said the current environment bore little resemblance to conventional economic cycles, with supply-side shocks including energy costs, tariffs and geopolitical disruption replacing the demand-led patterns that dominated the post-war period.
She added: "Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder.
"In today’s fiscal and financing environment, where many earnings pressures are linked to external shocks or competitive and technological disruption, boards that act early instead of waiting for conditions to improve will retain more options.”
