Weak consumer confidence has emerged as a growing threat to corporate performance, with a rising number of listed UK companies issuing profit warnings ahead of next month’s autumn Budget.
According to a new report from EY, 64 UK-listed firms issued profit warnings in the third quarter of 2025 — and one in five cited deteriorating consumer sentiment as a key factor. This marks the highest proportion of warnings linked to consumer confidence since late 2022, when soaring energy prices and the cost-of-living crisis drove sharp reductions in household spending.
EY’s data shows that macroeconomic and geopolitical instability also continues to bite. A record 47% of warnings referenced policy shifts or international tensions as drag factors, reflecting ongoing uncertainty over fiscal policy, regulatory changes and global conflicts.
Businesses in the software and computer services sector issued the most profit warnings, followed by construction and media. Construction has also been the most affected sector in terms of corporate collapse, recording 3,934 insolvencies in the 12 months to August, according to the Insolvency Service. Wholesale and retail firms — including those involved in vehicle repair — were the second most impacted, with 3,710 insolvencies over the same period.
Overall corporate insolvencies in England and Wales rose 2% year-on-year to 2,000 in September, although company administrations — typically used by larger enterprises — fell by 17% to 124.
Jo Robinson, UK & Ireland restructuring leader at EY-Parthenon, said the warning trend confirms that the uncertainty weighing on businesses has now clearly filtered through to households.
“The standout trend in the third quarter was the knock-on effect of weakening consumer confidence,” she said. “Persistent uncertainty which has weighed heavily on UK businesses has spread to households.”
She added that the proportion of FTSE-listed businesses issuing warnings over the past 12 months remains consistent with levels typically seen during periods of economic shock.
Christian Mole, EY-Parthenon partner and head of hospitality and leisure, said that while many consumer-facing businesses had adjusted to this year’s increase in employer National Insurance contributions, others were “struggling to absorb” rising costs.
He highlighted evidence of more selective spending, delayed purchasing and trading down to cheaper options. Within hospitality and leisure, casual and upscale dining operators are facing mounting pressure, while more affordable pub formats are demonstrating greater resilience.
“As consumers become more selective, authenticity and value are increasingly driving choice,” Mole said.
With the autumn Budget scheduled for 26 November, EY’s analysts say businesses are focused on how the government will address stalled growth, tax pressures and ongoing threats including cyber risk.
Robinson added: “As the government faces difficult decisions ahead of the autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks.”
