Profit warnings 'set to rise'

News Article - 15 October 2007
Category: Business

Ernst & Young has predicted that the number of UK-based firms issuing profit warnings could increase during the fourth quarter of the year.

Although the third quarter did not see a rise in profit warnings, the firm suggested that the recent credit crunch could have a significant impact upon some business sectors, the Financial Times reports.

"The UK economy's high dependence on debt makes it particularly vulnerable to the impact of a credit crunch on consumption and investment," the company stated.

Slower consumer activity is likely to have an effect on many within the consumer goods supply chain, it added.

A recent survey conducted by the Confederation of British Industry (CBI) and PricewaterhouseCoopers found that a net 11 per cent of financial services firms predicted overall business volumes would fall in the fourth quarter.

Ian McCafferty, chief economic advisor at the CBI, said that firms were becoming increasingly "pessimistic" in light of the credit crunch.

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