Profit warnings in UK reach new high
According to a report by accountants Ernst & Young, the number of profits warnings issued by companies publicly listed in the UK have risen to their highest number since November of 2001, in the wake of the September 11 terrorist attacks in the US.
There were 42 such warnings issued in April and 97 in the full second quarter of the year, an increase of 50 percent over the same period in 2004.
The report adds that profits warnings are running at a level of 2 per day this month, 22 in the first 10 days of the month.
The highest number of second quarter warnings in any sector was 13, from the support services sector and from media and entertainment businesses, while general retailers issued 10 profits warnings.
Ernst & Young says that this is just another conformation of collapsing confidence by business leaders, as reported by an Institute of Directors survey that shows the number of executives who are confident about the future has fallen by half.
The IoD’s chief economist said that the report from his organization is yet another sign that the Bank of England needs to cut interest rates in August.