UK businesses face more restructuring – as warnings over policy chaos hit a 25-year high
More than two in five (42%) profit warnings issued by UK-listed companies in 2025 cited the impact of policy change and geopolitical uncertainty as a leading factor, according to EY-Parthenon’s latest Profit Warnings report.
This marked a significant increase from 12% during 2024, and the highest annual proportion recorded for this cause in more than 25 years of EY’s analysis.
The report found that UK-based listed firms issued 240 profit warnings last year – including 55 in Q4 – the lowest annual total since 2021, when 203 warnings were recorded.
The other main driver behind profit warnings in 2025 was contract and order cancellations or delays, cited in a third (33%) of warnings, followed by weaker consumer confidence and rising costs, each referenced in 11% of all warnings.
Nearly a fifth (17%) of all UK-based listed businesses have issued at least one profit warning in the last 12 months, a similar percentage to this time last year (18%).
The sectors with the highest number of profit warnings last year were Software and Computer Services (30 warnings), Industrial Support Services – which encompasses business service providers, industrial suppliers and recruitment companies – and Retailers (both 23).
When combining the FTSE Retailers sector and FTSE Personal Care, Drug and Grocery sector, which includes supermarkets, 34% of listed retailers issued a warning during 2025, marking the fourth consecutive year that this proportion has been above a third.
“Our latest data shows that the pace of UK profit warnings has slowed, but this feels more like an uneasy pause than a turning point. Many firms continue to face a challenging and uncertain backdrop, with a record level of warnings referencing the knock-on effects of policy and geopolitical upheaval, including tariff-related impacts, Autumn Budget uncertainty, and employer National Insurance contributions changes coming into effect,” said Jo Robinson, EY-Parthenon Partner and UK&I Financial Restructuring Leader
“In the last year, we’ve seen businesses shift their focus from planning for a return to previous norms, to recalibrating for a global landscape of lower growth, higher costs and rapid technological disruption.”
Robinson noted that there is no playbook for adapting to this new reality and, while stronger liquidity and lower interest rates have given companies some breathing space, we expect restructuring activity to build as these issues come to a head.
“Much now hinges on what comes next: a bullish recovery where stability and falling interest rates boost confidence, or something more downbeat marked by slow growth and heightened volatility. With 2026 now well underway, these two contrasting narratives are finely balanced.”
