Profit Warnings

What to watch out for next?

EY said that profit expectations have in any case been falling “since last summer’s market shudder, which has created a low bar,” and that “it will take some time for some effects to work through and companies will be uncertain at this point about the extent and longevity of any adverse changes".

It warned that areas where pressures my build include: contracts and investment, government spending, financial services, consumer confidence, currency transaction and labour costs.

Then again, since EY completed their report, the government has been making noises about increasing infrastructure spending. However, the falling pound will create some inflationary pressure, at a time when inflation was rising anyway. Inflation may rise above 3% next year, meaning that growth in real wages may go negative, this will clearly hit companies in the business of selling to the consumer. Exporters, especially those with sales beyond the EU, may benefit from the falling pound.