UK profit warnings hit highest level in nearly two years as costs and conflict squeeze companies

UK-listed companies issued their highest number of profit warnings in nearly two years during the third quarter, as rising costs, geopolitical turmoil and weakening demand compounded pressure on corporate earnings.

Businesses issued 65 warnings in the three months to September, up from 59 in the previous quarter and the highest quarterly total since the final three months of 2024, when 71 warnings were recorded, according to EY-Parthenon.

Policy changes and geopolitical uncertainty were cited in 54 per cent of warnings, the highest proportion recorded for this factor in more than 25 years of analysis. Almost two in five warnings, 38 per cent, specifically referenced the conflict in the Middle East.

Rising costs featured in 35 per cent of warnings, the highest proportion for this cause since late 2022. Contract cancellations or delays accounted for 38 per cent, while weaker consumer confidence was cited in 20 per cent. Nearly one in five UK-listed companies has issued at least one profit warning in the past 12 months.

Jo Robinson, EY-Parthenon’s UK and Ireland financial restructuring leader, said companies were confronting structural disruption rather than a conventional economic cycle, with supply shortages, energy shocks, tariffs and geopolitical instability complicating business planning.

She warned that frequent policy changes were making forecasting, investment and capital allocation harder ahead of the Autumn Budget, adding that boards acting early would retain more options than those waiting for conditions to improve.

Housebuilders have emerged as a particular pressure point. Listed companies in the household goods and home construction sector issued eight warnings in the quarter, including six from housebuilders. Their total for 2026 has reached 14, already exceeding the 10 recorded during the 2008 global financial crisis.

Claire Gambles, an EY-Parthenon restructuring strategy partner, said housebuilding had become the “epicentre” of cost and interest-rate pressures. Government support for first-time buyers could help revive reservations and transactions, she said, but key details remain unresolved.

The findings underline the growing strain on companies facing higher operating costs, uncertain demand and rapid technological change — pressures that are increasingly combining to threaten earnings.