Proportion of profit warnings issued by UK-listed companies citing weaker consumer confidence hits three-year high
One in five of the 64 profit warnings issued by UK-listed companies during Q3 2025 cited the impact of weaker consumer confidence, the highest proportion recorded for this cause since 2022 and up from just 6% during the same period last year, according to EY-Parthenon’s latest Profit Warnings report.
While 19% of all profit warnings referenced falling consumer sentiment, this figure rises to more than half (56%) for listed retailers. The leading factor behind profit warnings during the third quarter was policy change and geopolitical uncertainty, cited in nearly half (47%) of warnings. This marked the highest percentage recorded for this cause in more than 25 years of EY’s analysis, and a significant increase from 17% in Q3 2024.
A third (34%) of profit warnings issued in the third quarter cited contract and order cancellations or delays, while 22% referenced tariff-related impacts, including weaker demand and supply chain disruption.
Over the last 12 months, nearly a fifth (18%) of UK-listed businesses have issued at least one profit warning.
Jo Robinson, EY-Parthenon partner and UK&I financial restructuring leader, said: “The latest profit warnings data shows that the persistent uncertainty which has weighed heavily on UK businesses has spread to households. The standout trend in Q3 was the knock-on effect of weakening consumer confidence, at its highest since late 2022 when rising energy prices and the wider cost-of-living crisis were having an acute impact on consumer behaviour.
“Companies are still clearly seeing ripples from earlier geopolitical tensions and policy shifts, and the proportion of firms to have issued a warning in the last 12 months has consistently been at a level typically associated with a period of economic shock for the past two years. As the Government faces difficult decisions ahead of the Autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks.
“While buoyant equity markets over the summer sustained a narrative of corporate resilience, resilience is not immunity. Forecasting confidence is being disrupted by near-constant change, and restructuring activity continues to rise as persistent pressures leave many companies with tighter liquidity and reduced flexibility. In this environment, firms must adopt a measured, scenario-based approach that balances both agility and strategic clarity.”
Software services, construction and media sectors lead Q3 warnings
The FTSE sectors with the highest numbers of profit warnings in Q3 2025 were Software and Computer Services, with 10 warnings issued, followed by Construction and Materials, and Media – both with six.
Companies from the FTSE Retailers sector and FTSE Personal Care, Drug and Grocery sector, which includes supermarkets, issued nine warnings in total during the third quarter, the highest number since Q4 2023 (also nine) and the highest Q3 total since 2022.
Christian Mole, EY-Parthenon partner and UK&I head of hospitality and leisure, added: “Companies from across consumer-facing sectors are reporting more selective spending, delayed purchases and trading down to lower-cost options. As consumers become more selective, authenticity and value are increasingly driving choice. Within the hospitality and leisure sector, casual and upscale dining in particular is feeling the strain of rising costs and changing consumer behaviours, with pub revenues proving more resilient. Additionally, although there seems to have been some improvement since the summer, late and irregular booking patterns are creating challenges around demand and liquidity planning across the airline, holiday and travel sectors.
“For both hospitality and retail, which employs 10% of the UK workforce, businesses have been heavily exposed to the change in National Insurance threshold levels and the National Living Wage increase and, while some have adjusted their cost base accordingly, others are struggling to absorb these increases. Against this more costly and unpredictable backdrop, the ability to remain adaptable and innovative, and to deliver value will play a big part in helping companies to thrive.”