The report found warnings among listed retailers hit their highest level for nearly two years and more than half cited falling consumer confidence.

Nearly a fifth of UK-listed firms alerting over profits have flagged the impact of weak consumer confidence, reaching the highest level for three years, research has revealed.

The latest EY-Parthenon report showed that of the 64 profit warnings between July and September, 19% cited falling consumer sentiment - up sharply from 6% a year earlier and the highest since 2022, at the height of the cost-of-living crisis.

And it found that retailers are feeling the pinch the most from the tougher consumer backdrop, with warnings among listed retailers hitting their highest level for nearly two years and more than half (56%) referencing falling consumer sentiment.

It comes as wider worries over the geopolitical and policy uncertainty continue to weigh on UK corporate plc as the report showed a new record proportion (47%) of firms alerting over earnings cited this as a leading factor, up from 17% a year ago.

Jo Robinson, EY-Parthenon partner and UK and Ireland financial restructuring leader, said: "The latest profit warnings data shows that the persistent uncertainty which has weighed heavily on UK businesses has spread to households.

"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."

Consumers are being more selective in how they spend, as well as delaying purchases and trading down to lower cost options, EY Parthenon said.

Rising costs also continue to wreak havoc on consumer-facing sectors, according to the figures.

Christian Mole, EY-Parthenon's UK and Ireland head of hospitality and leisure, said: "For both hospitality and retail, which employs 10% of the UK workforce, businesses have been heavily exposed to the change in national insurance threshold levels and the national living wage increase and, while some have adjusted their cost base accordingly, others are struggling to absorb these increases."

The total number of firms issuing profit warnings hit the highest since the end of last year and up 8% since the previous quarter.

Over the past year, nearly a fifth (18%) of all UK-listed businesses have issued at least one profit warning, the report found.

US President Donald Trump's trade war has continued to take its toll, with 22% of firms issuing profit warnings citing tariff-related impacts, including weaker demand and supply chain disruption.

Meanwhile, more than a third (34%) of profit warnings issued in the third quarter said contract and order cancellations or delays were one of the causes.

"As the Government faces difficult decisions ahead of the autumn Budget, businesses are continuing to navigate market shifts and external threats, adapting their operations and supply chains to ongoing uncertainty and growing risks like cyberattacks," Ms Robinson added.

Consumer belt-tightening takes toll on UK firms, report reveals