UK-listed companies issued 65 profit warnings between July and September, the highest quarterly total since the end of 2024, according to analysis by EY-Parthenon published ahead of John Healey’s first Budget on 28 October.

The total was up from 59 in the previous three months. More than half of the companies cited government policy and geopolitical uncertainty for the worsening outlook, EY-Parthenon found.

The consultancy said 35 per cent of third-quarter warnings blamed rising costs, the highest share since the end of 2022, when the figure reached 41 per cent at the peak of the cost of living crisis. Nearly a fifth (17 per cent) of all UK-listed businesses have issued at least one profit warning in the past 12 months, it said.

According to EY-Parthenon’s quarterly profit warnings analysis, the conflict in the Middle East was cited in 38 per cent of warnings during the quarter.

Jo Robinson, an EY-Parthenon partner, said: “With the autumn Budget around the corner, profit warnings linked to policy change and uncertainty, once concentrated around fiscal events or elections, have become a regular feature of our data.

“Businesses have shown considerable resilience, but the pace of policy change is making forecasting, investment and capital allocation much harder.”

Listed housebuilders have issued 14 profit warnings so far this year, according to EY-Parthenon. That exceeds the previous high of 10, recorded during the peak of the 2008 financial crisis.

Ms Robinson said housebuilding had become “the epicentre” of widespread cost and supply chain pressures.

A separate report by the Centre for Policy Studies (CPS) warned that the housing sector could face a further blow. The think tank said an annual wealth tax would make Britain the worst place of the 38 nations in the Organisation for Economic Co-operation and Development to own property or assets. Its analysis calculated that such a tax would see the UK fall from 35th to 38th place in the Tax Foundation’s property tax competitiveness rankings.

EY also estimated that Mr Healey’s financial headroom, the margin by which he can balance the books to meet his fiscal rules, has fallen from £23.6bn in March to £11.3bn. The consultancy said this means he will need to either cut spending or raise taxes to convince markets that the public finances are under control.

EY said higher government borrowing costs could remove a further £18bn from the headroom if the Strait of Hormuz remains closed into 2027.

Mr Healey is reported to be preparing to raise levies on banks, and The Telegraph has reported he is considering a £1bn raid on London offices. The Institute for Public Policy Research, a think tank, has urged him to increase taxes by £16bn.

A Teneo survey, reported today, found that 32 of 100 senior investors and executives would consider pausing, reducing or stopping UK investment if business taxes rise sharply.

Mr Healey’s predecessor, Rachel Reeves, announced about £70bn of tax rises over Labour’s first two years in power, including a £25bn increase in employers’ National Insurance contributions. Forecasts from the International Monetary Fund show the UK tax burden rising faster than in any other Western economy.

The Treasury has adopted “military-style” security protocols to prevent leaks of tax and spending decisions, with officials locked out of policies they are not directly working on, according to the Financial Times, which reported that information-sharing is also subject to electronic monitoring.

Alongside energy bills driven up by the war in the Middle East, businesses face higher borrowing costs as gilt yields rise and the Bank of England weighs interest rate increases. Andrew Bailey, the Bank’s governor, said on Friday that firms are cutting costs and squeezing margins rather than passing higher energy bills on to customers.

A Government spokesman said: “We know some businesses are facing cost pressures, but we are making the business environment work better for companies of all sizes through our £4.3bn business rates support package, small business plan and action on late payments.

“While the conflict in the Middle East is impacting the world economy, Britain is showing resilience. We have the joint second fastest growth in the G7 so far this year and the IMF have just upgraded our growth outlook for 2026.”

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