Economy looks up as profit warnings fall

New figures show that the UK economy is improving, after companies see the biggest fall in profit warnings since 2011.          

According to thisismoney.co.uk, figures from EY, previously known as Ernst & Young, show that the number of companies who warned that they would not meet their profit expectations, has fallen to 54. In comparison, that’s six less than last year and 18 less than in 2011.

In the first quarter of this year there were 72 profit warnings but that dropped by 25 per cent in the second quarter, the biggest drop since 2011.

Although the figures show the economy is recovering, those who want to start a franchise, especially in retail, should still be wary. EY warns that although the improved housing market and rise in employment figures have helped raise profits, retailers still have difficulties to face.

Alan Hudson, head of restructuring at EY UK & Ireland, said: “A rash of retail administrations, focused around last quarter’s rent day, suggests several parts of the retail industry are struggling in this ultra-competitive environment. Struggling retailers appear to share operating characteristics, rather than products. These include excess physical space, weak brands, low differentiation as well as the inability to compete with increasingly aggressive competitors on product and price,” reports thebusinessdesk.com.

The highest number of profit warnings came from software and computer services, travel and leisure and media industries.