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Profit warnings lowest in seven years, says E&Y

Profit warnings during 2009 tailed off compared to the previous year, research by Ernst and Young reveals.

Research by the accountancy firm shows that 282 profit warnings were issued during 2009, 37 per cent less than the 449 issued in 2008 and the lowest annual total since 2003’s total of 208.

In 2007, 384 were issued, up from 342 in 2006. In 2005 the number reached 381, up from 294 in 2004.

There were 50 profit warnings from quoted UK companies during the last quarter of 2009, compared to 126 in 2008, a year-on-year fall of 60 per cent.

While E&Y says the start of the year should see a return to growth for the UK economy, that growth will be hard to sustain due to Budgetary constraints and “some strong headwinds”.

E&Y restructuring partner Andrew Wollaston says: “Given the depth of the slump, recovery has certainly come quicker than we might have anticipated. This rapid economic recuperation, along with previously depressed earnings forecasts, is helping companies beat expectations and keep profit warnings low. Good news for UK plc, but this is not the end of the story. Rapid recovery costs and 2010 is when we start paying. Brace yourselves for a bumpy recovery.”

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