UK company profit warnings in 'rollercoaster ride'

Bank note and £1 coins Businesses are in for a "rollercoaster ride" according to Ernst & Young

A flurry of profit warnings at the start of the year were followed by a sharp dip in March, suggesting 2012 will be a year of unpredictability.

Business services firm Ernst & Young said there were 73 profit warnings issued during the first quarter of 2012, compared with 75 last year.

But they were uneven, hitting a three-year high in January and February, followed by a nine-year low in March.

It said the findings pointed to a "rollercoaster ride" for UK companies.

Ernst and Young said that easing off was due to an easing in eurozone tensions and an improvement in UK economic growth prospects.

Weak growth?

The latest official estimate of UK economic health will come on Wednesday with the release of the latest gross domestic product figures (GDP).

The Office for National Statistics is expected to reveal the economy just missed going into recession - defined as two consecutive quarters of negative growth - by growing 0.1% in the first quarter of 2012.

It shrank by 0.3% in the last three months of last year.

The independent Office for Budget Responsibility, which provides forecasts for the government, expects the economy to grow by 0.8% over the whole of 2012 and by 2% in 2013.

Ernst & Young's own Item Club of forecasters said last week that the UK economy would register "dismal" growth of 0.4% this year, rising to 1.5% in 2013.

The organisation said that there were fewer warnings from retailers than was normal for the time of year, but that only reflected lower expectations and was not a sign for hope.


The head of Ernst & Young's UK restructuring practice, Alan Hudson, said: "Retail sales should grow in 2012 - in contrast to 2011 - but there is still very little forward momentum and winners in one area can only create losers in another.

"However it's not just the lack of spending, but the rapid change in the way consumers are spending, that's causing the biggest tremors across the sector."

Mr Hudson said the special events taking place in the UK this year made it even harder to predict the economic outlook.

"It's still a tough consumer environment and the high oil price and uncertain impact of the Olympic and Jubilee summer on the travel sector in particular makes 2012 a tough year to predict."

The Bank of England itself has said the economy is expected to "zigzag" in and out of growth this year and that the extra Jubilee bank holiday caused problems for economic forecasters.

The Bank of England has increased its quantitative easing programme - aimed to boost the economy by buying bonds - to £325bn this year, and has continued to hold interest rates at a record low of 0.5%.

More on This Story

From other news sites

The BBC is not responsible for the content of external Internet sites

More Business stories



  • An undated file photo posted on 27 August 2014 by the Raqqa Media Center of the Islamic State group, showing IS fighters waving the group's flag from a damaged government fighter jet in Raqqa, Syria.Adapt or die?

    IS militants seem to be changing tactics after air strikes

  • signClean and tidy

    Things that could only happen in a Hong Kong protest

  • Child eating ice creamTooth top tips

    Experts on ways to encourage children to look after their teeth

  • Almaz cleaning floorAlmaz's prison

    Beaten and raped - the story of an African servant in Saudi Arabia

  • Train drawn by Jonathan Backhouse, 1825Original 'geeks'

    What hobby did this drawing start in 1825?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.