UK profit warnings rise

There has been an increase in the number of UK companies issuing profit warnings which indicates the economy is slowing.

According to Ernst & Young, in the 3 months to the end of June, there were 98 profit warnings from UK-listed companies, the highest in the period for seven years.

The worst affected were retailers and building companies, primarily due to the consumer slowdown and the mortgage freeze.

In addition, nearly 50% of the UK stock market listed housebuilders issued profit warnings in the 3-month period.

Housebuilders have been suffering of late due to the housing slowdown and job losses were announced last week at Barratt’s, Persimmon, Bovis Homes and Redrow.

13% of general retailers issued profit warnings with Marks and Spencer surprising investors with a profit warning earlier this month.

Keith McGregor from Ernst & Young said the affects of the credit squeeze have spread beyond the financial sphere and said a recession is a real possibility.

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