The number of profit warnings from UK-listed companies has risen to the highest level in two years, as the war in the Middle East triggers a surge in costs for businesses before the budget.
With less than a fortnight before John Healey’s tax and spending statement to the Commons, the consultants EY-Parthenon said companies quoted on the London stock market had issued 65 warnings in the three months to the end of September.
As the war in the Middle East rattles the global economy, business leaders are pressing the chancellor for a package of emergency support to soften the impact from soaring fuel costs and energy bills.
Healey has pledged to use his 28 October budget to give households and businesses “breathing space”. However, he has also warned that the government has limited resources to intervene as the conflict pushes the cost of borrowing to the highest level in decades, adding to the pressure on the public finances.
It emerged on Sunday that Healey is preparing to announce measures to help thousands of high street shops, cafes, pubs and hairdressers with rising costs by using the budget to cut business rates for small companies.
In a development that would honour a promise made by Andy Burnham in his Makerfield byelection campaign before entering Downing Street, the planned change, first reported by the Sunday Times, would result in the threshold at which small firms start paying business rates rising from £12,000 to £18,000.
According to the EY-Parthenon analysis, housebuilders have already issued more warnings this year than during the 2008 financial crisis. Separate figures released on Monday from the property platform Rightmove show house prices have fallen by 0.1% over the past 12 months.
Across all listed companies’ profit warnings, the most cited principal factor was policy change and geopolitical uncertainty, with rising costs also playing a large part.
Rising costs were the leading factor for 35% of the warnings issued, while 38% specifically cited the impact of the conflict in the Middle East. Almost a fifth (17%) of all UK-listed businesses have now issued at least one warning over their financial performance in the past 12 months.
Jo Robinson of EY-Parthenon said the figures showed how many challenges companies were now navigating: “With the autumn budget around the corner, profit warnings linked to policy change and uncertainty – once concentrated around fiscal events or elections – have become a regular feature of our data.
“Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder.”
The FTSE sector issuing the most warnings from July to September was household goods and home construction, including six warnings from listed housebuilders, whose 2026 total has reached 14 so far – already past the 10 in 2008, the peak of the global financial crisis.
The property website Rightmove, meanwhile, said average asking prices for newly listed homes had risen by 1% to £371,015 in October. However, over the past year, house prices are down by 0.1%. It also warned that rising mortgage rates were likely to make homes less affordable in a price-sensitive market.
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Highlighting the squeeze on households, average two-year fixed mortgage rates have risen to 5.55%, from 5.29% last month, and 4.25% before the US and Israel attacked Iran in February. That has added about £250 to average monthly mortgage payments for a new loan.
Colleen Babcock, a property expert at Rightmove, said: “The rapid rise in mortgage rates is really beginning to hit buyers’ budgets. We’re now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain, where prices had been more resilient this year.”
Figures from the Trades Union Congress published last week showed UK households have paid almost £14,000 on average in additional costs for mortgages, loans, energy and water bills over the past five years.
The union umbrella body urged the chancellor to use his budget to launch a cost of living support package funded by higher taxes on wealth and the banking industry.
A scheme to help first-time buyers on to the housing ladder pledged by Burnham is expected to be announced at the budget.
