UK profit warnings rise

There is concern over entertainment and leisure sector

The number of companies warning that they may miss profits forecasts has risen by a third according to a new survey.

There were 89 profit warnings in the three months to the end of September up from 67 from April-June, accountants Ernst and Young said.

This goes against the trend for the past two quarters which saw the number of British profit warnings fall.

The final three months of 2001 had seen a record high of 149 profit warnings in the wake of September 11.

Consumer confidence

The accountants says the increase in the number of retailing, entertainment and leisure sectors issuing profit warnings is particularly significant.

Most economists say it is the consumers who are keeping the economy out of recession.

If they are now cutting back on their spending this could have a damaging effect on the economy.

The number of companies with sales over £1bn which have issued profit warnings is also being viewed with concern by accountants.

The fear is that this will have a knock-on effect on the smaller companies that supply them.