UK profit warnings hit near two-year high ahead of autumn Budget
65 listed firms downgraded in a quarter as policy uncertainty overtakes demand cycles, waiting for the tax bill now costs more than the bill itself
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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 (Getty)
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Sixty-five UK-listed companies issued profit warnings in the three months to the end of September, the highest quarterly figure in nearly two years, according to advisory firm EY. The count rose from 59 the previous quarter and sits just below the 71 warnings of late 2024.
The data landed less than a fortnight before the autumn Budget — the first since Andy Burnham became prime minister — and the causes tell their own story. Policy change and geopolitical uncertainty were cited in 54 percent of warnings, the leading factor; 38 percent specifically referenced the conflict in the Middle East; 35 percent pointed to rising costs. One in six listed companies has issued at least one warning over the past twelve months.
Jo Robinson, an EY-Parthenon partner and UK restructuring lead, noted that warnings once clustered around fiscal events and elections have become a regular feature of the data. Her diagnosis: this is not a conventional economic cycle. The post-war pattern of demand-led boom and bust has been replaced since the pandemic by supply-side disruption — labour and material shortages, energy shocks, tariffs — that no quarterly forecast can absorb.
Retailers offer the sharpest illustration. Profit alerts among listed retailers more than doubled in the second quarter as consumers reined in spending and wage costs climbed — the same squeeze visible in the record London rents and the 0.1 percent GDP growth that the month's other figures recorded.
The mechanism matters more than the number. Businesses cannot price a tax change whose shape is unknown, so they pre-announce weakness to manage expectations — which means the budget's content is already being discounted before anyone has read it. Industry groups have asked the government, above all, not to raise business taxes, following cost pressures they attribute to recent budgets. EY's own finding is that the pace of policy change has made forecasting, investment and capital allocation harder for companies that have otherwise shown resilience.
Sixty-five firms told the market to lower its expectations in a single quarter, nine days before the Chancellor had said a word.