Profit warnings soared to their highest level since the financial crisis

Profit warnings from UK companies have reached their highest level since the financial crisis, according to EY.

A total of 86 earnings downgrades were issued by companies in the third quarter of 2022, the most from July to September since 2008.

This is up from 51 in the same period last year and 64 in the second quarter of this year.

This comes at a time when companies are struggling with rising costs, especially electricity bills, caused by the effects of Covid and the war in Ukraine. At the same time, the cost of living crisis is forcing consumers to cut back on spending.

The acceleration in profit warnings was particularly noticeable among consumer-focused businesses such as stores, travel firms and food manufacturers, EY said.

Jo Robinson, a partner in the consultancy division of EY-Parthenon, said: “Businesses are facing an unprecedented combination of headwinds, including rising costs, slowing demand and excess supply.”

Companies including Next, Primark owner Associated British Foods and The Hut Group have cut profit forecasts in recent weeks.