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Business & Economy

COVID-19 triggers profit warning spike in Yorkshire and North East

Listed companies in Yorkshire and the North East are issuing profit warnings at an unprecedented rate, with 75 per cent triggered by COVID-19, according to the latest analysis from EY (figures recorded up until 1pm, 27 March 2020).

Twenty profit warnings have been recorded by EY in Yorkshire and the North East since January 1 this year, double the number issued in the first three full months of 2019 (Q1 2019). Three-quarters of the warnings issued so far in 2020 specifically blamed the impact of COVID-19 for a material downgrade to their profit expectations reported EY.

When analysing all UK profit warnings made in 2020, compared to Q1 2019, EY found the Midlands has experienced the greatest year-on-year increase (209 per cent), followed by the South East (188 per cent), the North West (150 per cent) and Yorkshire & the North East (100 per cent).

Hunter Kelly, restructuring partner at EY, commented: “COVID-19 has profoundly affected the ability of businesses across Yorkshire and the North East to operate, which has made previous forecasts and plans redundant and is driving an exceptional rise in profit warnings.

“The impact is being felt throughout the economy, most notably in sectors closely connected to consumer spending, including travel, leisure and retail. With the partial lockdown set by the Government last week, we are likely to see an increasing impact in other sectors that require ‘employee proximity’, such as construction, manufacturing and business support services.

“While the many Government support schemes are extremely welcome, they will only serve to moderate the impact and will not be a complete answer. Businesses should plan for a prolonged impact after the partial lockdown has ended, such as considering how they will be able to deal with liabilities that are being stored up.”