Profit warnings are using consumer confidence to hit listed firms ahead of the budget
Weak consumer confidence has emerged as a growing threat to corporate performance, with a growing number of UK listed companies issuing profit warnings ahead of next autumn’s budget.
According to a new report from EY, listed firms have turned a profit in the third quarter of 2025 – and one in five concrete collapses as a retailer as a key factor. This marks the highest number of warnings linked to consumer confidence since late 2022, when rising energy prices and a cost-of-living crisis are driving a sharp decline in household spending.
EY data shows that macroeconomic instability and geopolitical tensions also continue to bite. A record 47% of warnings cited policy shifts or tensions in other countries as drags, reflecting continued uncertainty over monetary policy, regulatory changes and global conflicts.
Businesses in the software and Computer Services sector issued the most profit warnings, followed by construction and media. Construction was also the hardest hit sector in terms of corporate collapses, recording 3,934 insolvencies in the 12 months to August, according to the Insolvency Service. Wholesale and Retail firms – including those involved in vehicle repair – had the second largest impact, with 3,710 firms in the same period.
Corporate Insolvencies in England and Wales rose by 2% year-on-year to 2,000 in September, although corporate insolvencies – mostly used by large businesses – fell by 17%.
Jo Robinson, UK & Ireland innovation leader at EY-Parthenon, said the warning firm confirmed that uncertain confidence in businesses had been diluted well in households.
“The stagnation in the third quarter was the result of a knock on consumer confidence,” he said. “The continuing uncertainty weighing heavily on UK business has spilled over into households.”
He added that the proportion of FTSE-listed businesses that issued warnings in the past 12 months remained consistent with the levels usually seen in times of economic shock.
Mole Christian, partner of ey-parthenon and Head of hospitality and leisure, said that while many businesses facing the consumer have changed to this year’s increase in this year’s employer insurance contributions, others are “struggling to absorb” the rising costs.
He highlighted evidence of overspending, which has delayed buying and trading down in cheaper options. Within hospitality and leisure, risk food operators are facing increasing pressure, while more expensive pub formats are showing greater resilience.
“When consumers are more specific, authenticity and authenticity continue to be preferred,” says Mole.
With the autumn budget scheduled for 26 November, EY analysts say businesses are focusing on how the government will deal with stagnant growth, tax pressures and ongoing threats including cyber risk.
Robinson added: “As the government faces difficult decisions ahead of the autumn budget, businesses continue to navigate the shifts in the market and its threats, adapt their operations and supply chains to ongoing risks such as cyberattacks.”
