UK-listed companies have issued the highest number of profit warnings seen in two years, according to consultancy EY-Parthenon, which recorded 65 such notices in the three months to the end of September.
The consultancy said the rise in warnings has been driven in part by a surge in costs linked to the conflict involving Iran and wider instability in the Middle East, placing additional pressure on corporate margins ahead of the autumn fiscal statement.
What is a profit warning
Profit warnings are formal notices from quoted companies that their results will be below market expectations. A rising flow of such warnings is often seen by investors as a sign of weakening corporate outlooks and can reflect a range of pressures, including higher input costs, supply-chain disruption or falls in demand.
Budget backdrop
The surge in profit warnings comes with less than a fortnight to go before Chancellor John Healey is due to set out his tax and spending plans to the House of Commons. Policymakers and markets will be closely watching whether the figures influence the Chancellor's choices on fiscal support or measures aimed at easing cost pressures for businesses.
EY-Parthenon's quarterly tally will be monitored by investors and analysts as a barometer of corporate health on the London market, and as an early indicator of the economic backdrop firms are facing going into the final quarter of the year.