UK PROFIT WARNINGS ARE DOWN BY MORE THAN A THIRD

The dramatic drop indicates the UK could be nearing the bottom of the economic cycle, according to research conducted by Ernst & Young.

But the firm warned the picture is more complex than the numbers first suggest. Keith McGregor, restructuring partner at Ernst & Young said: “Many companies have withdrawn profit guidance due to a difficult forecasting environment, while three successive quarters of negative growth have diminished market expectations.

“This will reduce the number of profit warnings without necessarily being indicative of an upturn, particularly in sectors like retail, which felt the pain of the downturn first. The UK economy still lacks the catalysts for a strong and sustained recovery.”

He added that the peak for insolvencies in the Nineties recession came many quarters after its nadir.

Sectors that suffered a high number of profit warnings in the last quarter included support services and media.

AIM delistings due to financial stress and insolvency jumped 183 per cent in the last quarter according to Trowers & Hamlins, the City law firm, and UHY Hacker Young, the accountancy group.