Fifty-five profit warnings in the first quarter of 2026, down 12% on the year before. On paper, a UK economy quietly steadying itself. In practice, a quarter that split clean in two. Warnings opened the year drifting toward decade lows, then the conflict in the Middle East landed on 28 February and the mood turned. By the end of March they had climbed back to their joint-highest level since Q3 2022.
In the latest of our fireside chats, Company Watch CEO Craig Evans sits down with Kirsten Tompkins, Market Analyst at EY-Parthenon and co-author of the closely watched UK Profit Warnings report, to unpack what the Q1 numbers really mean for the businesses, lenders and supply chain teams who have to act on them.
About the report
EY-Parthenon has tracked UK profit warnings since 1999. This quarter set a record: 49% of all warnings cited policy change and geopolitical uncertainty, the highest share in 25 years of the report and up from 34% a year ago. Rising costs and cancelled contracts accounted for much of the rest. And while the headline count slipped, close to a fifth of all UK-listed companies have now warned in the past twelve months.
Software and Computer Services led the table again. Travel and leisure had its roughest quarter since 2022.
In the video, Kirsten and Craig get into why a so-called growth sector like software keeps topping the warnings list, the hidden leverage most lenders never spot until it is too late, and the second-round effects still working their way through supply chains. Kirsten also sets out the five areas of vulnerability she is watching most closely, and where the opportunity is quietly hiding, because there always is some.
What Company Watch data shows
EY-Parthenon benchmarks the listed market. Company Watch data shows how those same fault lines run through the entire UK economy, and the picture is a sobering one.
Of the 5,706,840 live companies on the UK register as of 3 June 2026, the strain gathers exactly where the conversation would lead you to look. Real Estate tops the Warning Area at 31.3%, with Hospitality & Food close behind on 27.7%. A company enters the Warning Area when its H-Score® drops below 25, and historically around 60% of them go on to fail.
Underneath that, 292,723 UK companies now meet our definition of a zombie, surviving rather than thriving while borrowing costs stay high. And of the 1,127 companies currently carrying profit warnings, 513 have issued three or more. That last figure is the one to sit with, because on average one in five companies delists within a year of its third warning.
The message from both datasets is the same: stay vigilant, stress-test your assumptions, and look across the whole group rather than the single entity in front of you.
EY-Parthenon’s report provides the benchmark view of the listed market, and Company Watch data shows how those same fault lines are developing across the wider economy. To explore the full sector breakdown and drivers, read the EY-Parthenon Q1 2026 Profit Warnings Report.
