Profit Warnings Hit Two-Year High as Businesses Brace for Healey's Budget — Housebuilders Worse Off Than 2008

Nine days before John Healey's first Budget, British boardrooms have delivered their verdict on the state of the economy — and it isn't pretty. Sixty-five UK-listed companies warned on profits in the three months to September, the highest number in nearly two years. The last time boards were this gloomy was the final quarter of 2024, when 71 issued warnings.

The figures come from EY-Parthenon's latest profit warning report, published today, and they tell a story of an economy being hit from every direction at once. Geopolitics, policy uncertainty, rising costs, Middle East conflict, cautious consumers — pick your poison.

What the numbers actually say

Warnings rose from 59 in the second quarter to 65 in the third. Across the stock market, 17% of listed companies have now issued at least one profit warning in the past 12 months — almost one in five. Policy change and geopolitical uncertainty was the single biggest cause, featuring in 54% of warnings. A striking 38% explicitly blamed the ongoing conflict in the Middle East, and more than a third — 35% — pointed to rising costs.

Jo Robinson, EY-Parthenon's UK&I financial restructuring leader, said the figures reflect "the variety of structural changes and challenges that companies are currently navigating." She's blunt about how strange this economy is: "This is not a conventional economic cycle. For much of the post-war period, the economy followed a familiar demand-led boom-and-bust pattern but, since the pandemic, supply-side disruption — including material and labour shortages, energy shocks, tariffs and wider geopolitical disruption — has become far more significant."

Housebuilders are suffering more than in 2008

The sector hit hardest will make grim reading in Downing Street. Construction and household goods firms issued eight warnings between them, with listed housebuilders alone issuing six in the quarter — bringing their total for 2026 to 14. That's already more warnings than housebuilders issued during the peak of the 2008 financial crisis.

Names you'll know are in the firing line: Vistry, Persimmon and Taylor Wimpey were among those warning on profits, blaming cost inflation, weaker sales rates and a lack of first-time buyers. Claire Gambles, EY's financial restructuring strategy partner, didn't hold back: "Housebuilding has become the epicentre of these cost and interest rate pressures." For a government that keeps promising a housebuilding boom, that's a flashing red light.

Retailers are bracing for a brutal Christmas

Retailers face a particularly nasty cocktail of rising costs and nervous shoppers. British Retail Consortium figures released last week showed retail sales grew just 1.3% in September — down from 2.3% a year earlier. Non-food sales barely moved at 0.3%, and in-store spending on anything that isn't food crept up by a pitiful 0.1%.

The industry is also being crushed by tax. Fresh research from the BRC and UKHospitality found retailers pay the equivalent of 72p in business taxes for every £1 of pre-tax profit, compared with an average of 50p across the 11 major sectors studied. No wonder retailers are lobbying furiously for the Budget to ease their burden after two years of sharp rises in employment and property costs.

What this means for the Budget on October 28

The timing couldn't be worse for the Chancellor. The warnings data lands just nine days before Healey stands up in the Commons for his first Budget, with business groups pleading with him not to pile on further tax increases. "With the autumn Budget around the corner," Robinson noted, "profit warnings linked to policy change and uncertainty — once concentrated around fiscal events or elections — have become a regular feature of our data."

Her advice to boards is sobering: "Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder. In today's fiscal and financing environment... boards that act early instead of waiting for conditions to improve will retain more options."

Translation? Hope is not a strategy. The companies warning today are the ones acting early — and there will be more of them if the Budget adds to their load.

Editor's note: we searched for a recent broadcast video from a major UK outlet covering EY's profit warning figures but could not verify a suitable one before publication. We'll add a video link when a verified one is available.

Sources

• Retail Gazette — "UK profit warnings hit near two-year high as retailers brace for Budget"
• Radio NewsHub — "UK profit warnings jump to highest since 2024 ahead of Budget"
• UK Pulse — "UK company profit warnings reach highest level in nearly two years"