UK profit warnings from listed firms hit two-year high as Middle East war pushes up costs
UK-listed companies issued 65 profit warnings in the three months to the end of September, the highest quarterly level in two years, according to EY-Parthenon, with 38% of warnings citing the impact of the Middle East conflict.
UK profit warnings from listed firms hit two-year high as Middle East war pushes up costs
Warnings at a two-year high
Companies quoted on the London stock market issued 65 UK profit warnings in the three months to the end of September, the highest quarterly tally in two years, according to EY-Parthenon. Rising costs were the leading factor in 35% of the warnings, while 38% specifically cited the impact of the conflict in the Middle East.
The consultancy found the most cited principal factor across all warnings was policy change and geopolitical uncertainty. The pain is broad: almost a fifth (17%) of all UK-listed businesses have issued at least one warning over their financial performance in the past 12 months.
- Rising costs were the leading factor in 35% of warnings issued
- 38% of warnings specifically cited the conflict in the Middle East
- 17% of all UK-listed businesses have warned in the past 12 months
Jo Robinson of EY-Parthenon said policy-linked warnings have become a regular feature of the data, noting that with the autumn budget approaching, such warnings were once concentrated around fiscal events or elections. She added that the pace of policy change is making forecasting, investment and capital allocation much harder for businesses.
Housebuilders surpass crisis-era warnings
The FTSE sector issuing the most warnings from July to September was household goods and home construction, including six warnings from listed housebuilders. Their 2026 total has reached 14 so far – already past the 10 issued in 2008 at the peak of the global financial crisis.
Rightmove data released on Monday showed house prices have fallen by 0.1% over the past 12 months, though average asking prices for newly listed homes rose by 1% to £371,015 in October. 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, adding about £250 to average monthly mortgage payments for a new loan.
"We're now seeing mortgage rate rises feed through to seller pricing in many of the cheaper parts of Great Britain."
Colleen Babcock, a property expert at Rightmove, made that point while warning that rising mortgage rates were likely to make homes less affordable in a price-sensitive market.
Budget response and calls for support
Chancellor John Healey has pledged to use his 28 October budget to give households and businesses breathing space, though he has warned the government has limited resources to intervene as the conflict pushes the cost of borrowing to the highest level in decades.
He is preparing to cut business rates for small companies, first reported by the Sunday Times: the threshold at which small firms start paying business rates would rise from £12,000 to £18,000, honouring a promise by Andy Burnham from his Makerfield byelection campaign. A scheme to help first-time buyers on to the housing ladder, pledged by Burnham, is also expected to be announced at the budget.
Demands for more action are mounting. TUC figures published last week show 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 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, while business leaders are pressing for a package of emergency support to soften the impact from soaring fuel costs and energy bills.
The chancellor delivers his tax and spending statement to the Commons on 28 October, where the business rates change and the first-time buyers scheme are expected.
