Number of London-listed companies warning of lower profits soars
Updated:
The number of London-listed companies warning of lower profits has soared this year after Labour's tax raid on business.
A damning report today shows that UK plc issued 59 alerts in the second quarter of the year – a 20 per cent jump compared to 49 a year earlier.
In a blow to Rachel Reeves, almost half said policy changes – such as Labour's National Insurance and minimum wage hikes – and geopolitical uncertainty would hit earnings.
That is compared to a level of just 4 per cent a year earlier, before Reeves announced £40billion of tax hikes in her Budget.
The report by EY-Parthenon said uncertainty fuelled by 'rapid and unpredictable policy shifts' has a 'paralysing effect' on 'confidence, decision-making and spending'.
'Governments are tightening their belts in response to rising post-pandemic debt levels,' the report said. 'Companies are feeling the impact of cuts and delays in public spending across the globe, alongside tax changes such as the rise in US tariffs and higher National Insurance Contributions and the national living wage.'
Under pressure: In a blow to Rachel Reeves, almost half of companies said policy changes and geopolitical uncertainty would hit earnings
Other challenges included regulatory delays and shifts in green targets.
Meanwhile, those citing contract and order cancellations or delays remained at a record high of 40 per cent between April and June, while one in three referred to Donald Trump's tariff war.
EY-Parthenon partner Jo Robinson said: 'The data reflects the scale of persistent uncertainty and how heavily it continues to weigh on UK businesses. While this uncertainty has been a recurring theme since mid-2024, it has intensified this year, driven largely by geopolitical tensions and policy shifts, compounding pressure on earnings and forecasts.'
Nearly a fifth of London-listed firms have warned on profits in the last year. In the second quarter, the sectors worst-hit were industrial support services, computer services and retailers. Listed retailers issued seven alerts, more than double the three recorded in the first three months of the year.
The sector employs 10 per cent of UK workers and 'is disproportionately exposed' to tax and wage increases.
'Many have adapted their cost base but we're seeing the warnings from those unable to absorb the impact,' the report said. 'Tariff implications, whilst not yet a major driver of distress, have also added to supply chain complexity and the cost base.'
Silvia Rindone, UK and Ireland retail lead at EY, said the retail profit warnings highlighted softening demand and 'structural headwinds'.
She said: 'Retailers tell us that falling sales are indicative of a longer-term shift, with consumers becoming more value-focused and less brand-loyal, which leaves cost-pressured retailers in a bind.'
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