Add thelocalreport.in As A Trusted Source
Nearly a fifth of UK-listed companies remain cautious over profits, with weak consumer confidence hitting a three-year high, research has revealed.
Latest EY-parthenon The report showed that 19% of the 64 profit warnings between July and September cited a decline in consumer sentiment – sharply up from 6% a year earlier and the highest since 2022, at the height of the cost-of-living crisis.
And it found that retailers are feeling the most pain from the tough consumer backdrop, with warnings among listed retailers at the highest level for almost two years and more than half (56%) citing a decline in consumer sentiment.
It comes as broader concerns over geopolitical and policy uncertainty continue to weigh on UK corporate plc as a new record proportion of firms (47%) cited this as a key factor in being cautious on earnings in the report, up from 17% a year earlier.
Joe Robinson, EY-Parthenon Partner and UK & ireland The financial restructuring leader said: “The latest profit warning data shows that the persistent uncertainty, which has hit UK businesses hard, has spread to households.
“The standout trend in the third quarter was the impact of weakening consumer confidence, which was at its highest level since the end of 2022 at a time when rising energy prices and the broader cost of living crisis were having a sharp impact on consumer behavior.”
consumers EY Parthenon said they are becoming more selective in how they spend, as well as delaying purchases and trading up on lower-cost alternatives.
Rising costs are also wreaking havoc on consumer-facing sectors, according to the data.
Christian Moll, head of hospitality and leisure for UK and Ireland at EY-Parthenon, said: “For both hospitality and retail, which employs 10% of the UK workforce, businesses have been hit hard by changes to National Insurance limit levels and increases in the National Living Wage and, while some have adjusted their cost base accordingly, others are struggling to absorb these increases.”
The total number of companies issuing profit warnings is the highest since the end of last year and up 8% from the previous quarter.
The report found that in the past year, almost a fifth (18%) of all UK-listed businesses have issued at least one profit warning.
US President Donald Trump’s trade war continues to impact, with 22% of companies issuing profit warnings citing tariff-related impacts including weak demand and supply chain disruptions.
Meanwhile, more than a third (34%) of profit warnings issued in the third quarter said cancellations or delays in contracts and orders were a reason.
“As Government Difficult decisions are faced before autumn BudgetBusinesses are continuing to deal with market changes and external threats, Ms Robinson said, adapting their operations and supply chains to ongoing uncertainty and growing risks such as cyber attacks.