Companies issue 117 profit warnings

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The deluge of gloomy corporate news represents the worst first quarter for UK firms since 2008 and third successive quarter of 100 or more warnings, accountants Ernst & Young (E&Y) said.

The worst hit sector was support services, with 22 warnings, followed by media with 13, as the UK sinks into deep recession.

The shockwaves spreading more widely from financial sector woes have also impacted industrial engineering and computer firms, which have issued 10 warnings each.

But E&Y restructuring partner Keith McGregor said the "tone of company statements has also darkened".

"The prospects for 2009 appear as uncertain and as gloomy as at any point in the crisis. Green shoots will find it hard to flourish in such stony ground; we still believe that the worst of the downturn for many companies is yet to come."

More than 60% of household goods and housebuilding firms have issued warnings in the past six months. These can expect "little respite" in 2009, according to E&Y.

Meanwhile the scale of the problems facing the manufacturing sector was underlined by the sharp rise in warnings from industrial engineering companies. The sector has reported 19 warnings in the past six months, compared with just one in the preceding six months.

Mr McGregor predicted a "slow, arduous and not necessarily linear" recovery from the UK's current economic woes.

He added: "The toxic mix of the continuing credit crunch, together with a global economic downturn, is exposing corporate frailties. Governments and central banks also have little room to manoeuvre in their fight against recession even before the impact of diminishing tax receipts truly hits home."