Fourfold rise in profit warnings across East of England as firms buckle under pandemic strain
- Credit: Archant
The East of England has seen the third highest year-on-year increase in profit warnings across all UK regions as the effects of the coronavirus crisis reverberate across the economy.
The region saw a four-fold year-on-year rise in warnings in the first half on 2020 – but there are some signs of improvement with numbers dipping slightly in quarter 2.
Three quarters of struggling firms cited the impact of the pandemic, according to EY’s latest Profit Warnings report.
MORE – ‘No deal’ Brexit looks increasingly likely, outgoing farm chief fearsThe accountancy giant recorded 12 profit warnings in the region in the first half of 2020 – compared to just three during the same period last year.
In the first quarter of 2020, quoted companies in the East of England issued seven warnings, the highest since the third quarter of 2013.
Profit warnings were spread across a wide range of sectors in the region, with no one sector affected more than another.
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Adrian Bennett, a Partner at EY in the East of England, said the crisis had exacerbated existing structural challenges in some companies, which had felt the fallout most acutely.
“While it’s been a worrying sign that profit warnings have seen such a rise in the region when compared to this time last year, it is not unexpected given the current circumstances and measures that businesses have had to put in place to deal with the global pandemic,” he added.
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“Many businesses that were essentially sound before the virus struck, have markedly suffered too, being forced to reassess their expectations and business plans.”
It was “vital” the region’s businesses didn’t underestimate the depth and extent of both the immediate and long-term challenges ahead, he warned.
“The East of England has a very diverse business economy, including centres for life-sciences and pharmaceutical in the Cambridge area and research and development-led agri-tech to the East of the region.
“All businesses are facing similar challenges, however, it’s a positive reflection of the resilience of those based in the region, that many have been able to weather the storm of Covid-19 and pivot their operations to make the most of new opportunities to diversify, refocusing on different market segments during the last few months.”
There were also further twists and turns likely in Brexit talks, he added.