The economic landscape for the United Kingdom’s listed companies is increasingly fraught, with 64 businesses issuing profit warnings in the third quarter of 2025. This significant number reflects a dual pressure cooker of weakening consumer confidence and unprecedented geopolitical and policy uncertainty, marking a challenging period for the nation’s business sector.
Consumer Confidence Falters, Retailers Feel the Pinch
The latest trend data reveals a worrying escalation in the impact of declining consumer sentiment on corporate earnings. In Q3 2025, 19% of all profit warnings cited weaker consumer confidence as a key factor, a figure not seen since the height of the cost-of-living crisis in late 2022. This represents a sharp rise from just 6% during the same period last year. Retailers, in particular, are bearing the brunt of this consumer caution, with more than half (56%) of profit warnings from this sector directly referencing the squeeze on household spending. Consumers are exhibiting more selective spending habits, delaying major purchases, and increasingly opting for cheaper alternatives, signaling a broad-based dampening effect on demand across the United Kingdom.
Record Levels of Geopolitical and Policy Uncertainty
Adding to the economic headwinds, a record proportion of UK companies – nearly half (47%) – cited policy changes and geopolitical uncertainty as a primary driver for their profit warnings. This figure marks a significant surge from 17% in Q3 2024 and represents the highest percentage recorded in over 25 years of analysis by EY. The pervasive instability stems from a confluence of factors, including global conflicts, evolving international trade policies, and shifting regulatory landscapes, creating a climate of unpredictability for businesses. This uncertainty has clearly filtered through from the corporate realm to households, exacerbating the challenges faced by businesses.
Sectors Facing Headwinds
While many sectors are feeling the strain, specific industries stand out as being particularly vulnerable. Software and Computer Services companies have issued the highest number of profit warnings, with 10 alerts recorded in Q3 2025. The construction sector and media companies also reported six warnings each, underscoring difficulties in these vital areas of the UK economy. The retail sector, as previously noted, is under immense pressure, with nine profit warnings issued, reaching its highest level since late 2023.
A Persistent Trend of Profit Warnings
The 64 profit warnings issued in the third quarter continue a worrying trend observed over the past year. Nearly a fifth (18%) of all UK-listed businesses have issued at least one profit warning in the last 12 months. This sustained high level of warnings is often associated with periods of economic shock or recession, indicating that businesses are navigating an environment far removed from steady growth. Beyond consumer sentiment and geopolitical shocks, other factors contributing to these warnings include a significant proportion (34%) citing contract and order cancellations or delays, and 22% referencing tariff-related impacts such as weaker demand and supply chain disruptions.
Expert Insights and Future Outlook
Analysts from EY-Parthenon highlight that the persistent uncertainty has not only weighed on businesses but has now clearly spread to households. Jo Robinson, UK & Ireland restructuring leader at EY-Parthenon, stated that the knock-on effect of weakening consumer confidence was the standout trend in the third quarter. Christian Mole, EY-Parthenon partner and head of hospitality and leisure, noted that businesses are struggling to absorb rising costs, including increases in National Insurance contributions and the National Living Wage, particularly impacting consumer-facing sectors.
The cumulative effect of these pressures paints a complex picture for the United Kingdom’s business community. As the year draws to a close, the interplay between subdued consumer spending and a volatile global policy environment presents significant challenges, demanding resilience and strategic agility from companies navigating this trending news landscape.
