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Profit warnings fell in 2009

Despite the fact that 2009 was one of the worst years on record for the UK economy, the number of profit warnings released by public companies fell by 37% to a six-year low. In total there were 282 profit warnings during 2009 with the vast majority of these coming in the first quarter when the UK economy appears to have been at its lowest. So what does this show us about the future?

The final quarter of 2009 saw just 50 profit warnings which was a reduction of over 60% on the same period in 2008. On the surface it would therefore seem as though the UK economy has bottomed out and is now beginning to rise but whether corporate profits will rise at the same speed and will be as "predictable" as the economic recovery remains to be seen. So is the worst now over for the UK corporate sector?

One of the main problems we will face in 2010 is one of complacency and believing that the UK economy is returning to the boom and bust times. More and more analysts are now warning about the fragile and weak nature of the UK economic recovery so far, and suggesting that complacency is a very dangerous emotion. It is true to say that 2010 could turn out to be the year when the economy moves back into growth but it could also be the year when over-optimism causes more problems for the economy!

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