UK-listed companies have issued profit warnings at their highest level in nearly two years, as the war in the Middle East drives up costs and businesses prepare for the government’s autumn budget.
A total of 65 companies listed on the London stock market issued warnings in the three months to the end of September, according to analysis by consultancy EY-Parthenon. The figure is up from 59 in the previous quarter and marks the highest quarterly total since the final three months of 2024, when 71 warnings were recorded.
The conflict in the Middle East was cited by 38% of companies issuing warnings during the quarter, while 35% pointed to rising costs as a leading factor. Policy changes and geopolitical uncertainty were collectively responsible for 54% of warnings, the highest proportion recorded for this category in more than 25 years of EY’s analysis.
The figures come less than a fortnight before Chancellor John Healey is due to deliver his budget on 28 October, with business leaders pressing the government for support to offset higher energy bills and fuel costs. Healey has pledged to give households and businesses “breathing space”, although he has warned that the government has limited room for intervention as borrowing costs rise.
Healey is reportedly preparing measures to support thousands of high street shops, cafes, pubs and hairdressers through changes to business rates. The proposed reforms would raise the threshold at which small firms begin paying business rates from £12,000 to £18,000, according to the Sunday Times.
Housebuilders have been among the worst affected businesses, with listed firms issuing 14 profit warnings so far this year. That already exceeds the 10 warnings recorded during the peak of the global financial crisis in 2008, as developers face higher costs, subdued demand and rising mortgage rates.
The household goods and home construction sector recorded the highest number of warnings during the third quarter, with six coming from listed housebuilders. Across the wider sector, eight warnings were issued between July and September.
Property website Rightmove reported that average asking prices for newly listed homes rose by 1% to £371,015 in October. However, prices remain down 0.1% over the past 12 months, with the company warning that rising mortgage rates were putting further pressure on affordability in an already price-sensitive market.
Average two-year fixed mortgage rates have risen to 5.55%, up from 4.25% before the US and Israel attacked Iran in February. The increase has added around £250 to monthly payments on a typical new mortgage, placing further pressure on household budgets.
Jo Robinson of EY-Parthenon said businesses were facing mounting difficulties in planning investment and allocating capital as policy changes became more frequent. She said profit warnings linked to uncertainty, once concentrated around fiscal events and elections, had become a regular feature of the consultancy’s data.
Separate figures published by the Trades Union Congress last week showed UK households had incurred almost £14,000 in additional costs for mortgages, loans, energy and water bills over the past five years. The organisation has urged the government to introduce a cost of living support package funded through higher taxes on wealth and the banking industry.
The budget is also expected to include a scheme to help first-time buyers onto the housing ladder, following a pledge by Prime Minister Andy Burnham. However, with borrowing costs elevated and businesses continuing to warn over their financial outlook, the scale of support available remains uncertain.
