Number of profit warnings hit 7-year high

Research by accountancy group Ernst & Young (E&Y) has found that profit warnings by firms listed on the London Stock Exchange reached a 7-year high last year.

E&Y said that the number of profit warnings by UK-listed companies was 449 in 2008, 17% higher than the previous year.

The economic downturn has had a major impact on almost all industries and according to the E&Y, the next 12 months looks set to be just as bad, if not worse.

The research found that support services was hit particularly hard with 67 warnings, while general retailing had 52.

The retailing industry has been hit particularly hard of late as several companies have gone bust, most notably Woolworths and MFI.

However, the housebuilding and the car industries have also been badly affected with 60% of listed firms in both sectors having warned on profits, said E&Y. In the last week alone, housebuilder Bovis and car giant Nissan have announced job losses as a result of the economic downturn.

According to Keith McGregor, restructuring partner at Ernst & Young, rising unemployment will do nothing to improve consumer confidence - one of the main factors to aid recovery.

The report from E&Y comes as the National Institute of Economic and Social Research warned this weekend that the economic downturn is worsening.

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