UK companies grapple with consumer confidence downturn as geopolitical tensions intensify

UK-listed firms face rising financial pressures amid falling consumer confidence and escalating geopolitical risks, with retail sectors hardest hit, according to recent EY-Parthenon report.

UK-listed companies are facing mounting challenges as consumer belt-tightening and geopolitical uncertainty take a growing toll on their financial performance. A recent EY-Parthenon report reveals that nearly 20% of listed firms issuing profit warnings between July and September 2025 cited falling consumer confidence—the highest level in three years. Retailers are feeling the pinch most acutely, with over half of listed retailers referencing falling consumer sentiment in their profit warnings. This marks a continuation of trends seen since late 2022, when rising energy prices and the broader cost-of-living crisis began sharply impacting consumer behaviour.

Jo Robinson, EY-Parthenon partner and UK and Ireland financial restructuring leader, highlighted the significance of consumer confidence in this latest data, saying the weakening of consumer spending has become a dominant factor weighing on UK businesses. “The standout trend in the third quarter was the knock-on effect of weakening consumer confidence, at its highest since late 2022 when rising energy prices and the wider cost-of-living crisis were having an acute impact on consumer behaviour,” she said. Consumers are increasingly selective, delaying purchases and trading down to lower-cost options, amplifying pressures on consumer-facing sectors.

Retail and hospitality sectors, representing 10% of the UK workforce, have been hard-hit by rising operational costs including national insurance thresholds and increases in the national living wage. Christian Mole, EY-Parthenon’s head of hospitality and leisure, explained that while some businesses have adjusted their cost base, many continue to struggle to absorb these price rises. These dynamics have contributed to the total number of profit warnings reaching the highest level since late 2024, up 8% on the previous quarter. Over the past year, nearly a fifth (18%) of all UK-listed companies have issued at least one profit warning.

Wider geopolitical and policy uncertainty is also playing a significant role in the deteriorating outlook, with 47% of firms issuing profit warnings citing this as a leading factor—nearly triple the 17% figure from the previous year. Trade tensions, including ongoing impacts from US trade policies, continue to disrupt supply chains and weaken demand, according to the report. Tariff-related issues were mentioned by 22% of services issuing profit warnings. Furthermore, contract and order cancellations or delays were cited by over a third (34%) of companies as a major cause of profit warnings, underscoring the uncertain business environment.

Industry analysis also reveals that the challenges are not confined to listing-wide trends but extend into specific business sectors. Retail Gazette data from earlier years showed nearly half of listed retailers issued profit warnings in 2022 amid rising costs and weakened demand, while recent reports indicate 41% of FTSE retailers issued warnings in the last 12 months, driven by cost-of-living pressures. In consumer-facing sectors more widely, 36% of businesses flagged profit warnings, including high percentages in personal care, grocery, and drug retail segments. The pattern of increasing disruptions from contract delays and cost pressures appears consistent across quarters.

The broader economic context remains challenging, with inflationary pressures, labour market constraints, and higher interest rates combining to squeeze margins across sectors. Companies are navigating these obstacles while adapting operations and supply chains amid ongoing uncertainty, including growing risks such as cyber threats. As the government prepares for its autumn Budget, business leaders face difficult decisions in adjusting to the persistent fragility in both consumer behaviour and the wider geopolitical landscape.

Despite these headwinds, some companies, such as UK cycling retailer Sigma Sports, have reported a tentative recovery following previous losses linked to post-COVID economic instability and a slump in consumer demand. The company described its 2024 financial year as “positive,” highlighting increased market share after the collapse of a major competitor. Such individual performances illustrate that while the overall environment is difficult, adaptive strategies and market shifts may offer opportunities amid the prevailing uncertainty.

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Source: Noah Wire Services

Noah Fact Check Pro

The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
8

Notes:
The narrative is recent, with the earliest known publication date being October 19, 2025. The report is based on a press release from EY-Parthenon, which typically warrants a high freshness score. However, similar content has appeared in other reputable outlets, such as ITV News, indicating that the information is not exclusive. ([itv.com](https://www.itv.com/news/2025-10-19/consumer-belt-tightening-takes-toll-on-uk-firms-report-reveals?utm_source=openai))

Quotes check

Score:
7

Notes:
The quotes from Jo Robinson and Christian Mole are consistent with those found in the ITV News report, suggesting they are directly sourced from the EY-Parthenon press release. No significant variations in wording were found, indicating the quotes are reused. ([itv.com](https://www.itv.com/news/2025-10-19/consumer-belt-tightening-takes-toll-on-uk-firms-report-reveals?utm_source=openai))

Source reliability

Score:
9

Notes:
The narrative originates from a reputable organisation, EY-Parthenon, a well-known consultancy firm. The report is based on their recent findings, which are credible and widely recognised. ([itv.com](https://www.itv.com/news/2025-10-19/consumer-belt-tightening-takes-toll-on-uk-firms-report-reveals?utm_source=openai))

Plausability check

Score:
8

Notes:
The claims about UK-listed companies issuing profit warnings due to falling consumer confidence align with recent trends and reports from EY-Parthenon. The data is consistent with previous findings, such as the 2024 report where 19% of UK-listed companies issued a profit warning, the third highest annual proportion in 25 years. ([ey.com](https://www.ey.com/en_uk/newsroom/2025/01/one-in-five-uk-listed-companies-issued-profit-warning-in-2024?utm_source=openai)) The narrative also highlights the impact of geopolitical uncertainty, which is a known factor affecting UK businesses. The language and tone are appropriate for the topic and region, with no inconsistencies noted.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary:
The narrative is based on a recent EY-Parthenon report, with quotes directly sourced from their press release. The information is consistent with previous reports and aligns with known trends affecting UK-listed companies. The source is reputable, and the content is plausible and well-structured.