UK Profit Warnings Hit Two-Year High as Energy Costs Soar Amid Global Conflict

Companies listed on the London stock market issued 65 profit warnings in the third quarter of 2026, the highest volume in two years, as rising energy bills and other business costs impact operations[1]. This increase comes as the “US-Israeli war on Iran” or “conflict between the US and Iran” contributes to a surge in global gas prices, increasing expenses for businesses across the United Kingdom[1][2][3]. British steelmakers, in particular, are paying nearly £30 per megawatt hour more for electricity than their French counterparts, representing the largest premium in three years[2][10][11].

TheThe rise in costs and profit warnings highlights the precarious position of UK industry, with the government responding through new schemes aimed at alleviating some of the financial burden on manufacturers[1][3]. These efforts aim to help businesses navigate a challenging economic environment driven by international geopolitical events.

What the Records Show

Consultants EY-Parthenon reported that UK-listed companies issued 65 profit warnings during the three months ending September 2026[1]. This volume represents the highest number in two years[1]. The rising costs for businesses are linked to the “war in the Middle East,” which has triggered a surge in fuel and energy prices[1]. Analysis by UK Steel shows that British steelmakers are at a significant disadvantage regarding electricity costs compared to their European rivals[2][10]. The premium paid by the UK steel industry over French steelmakers has reached almost £30 per megawatt hour, the highest level in three years[2][10][11]. This gap was £18 per MWh last year[11].

The Timeline

The UK government has been addressing industrial energy costs through various initiatives. On October 31, 2025, the government confirmed an increase to the Network Charging Compensation (NCC) discount from 60% to 90%, effective April 2026[12][14]. This NCC uplift was designed to reduce electricity network charges for Energy Intensive Industries (EII) such as steel and chemicals[13][14].

In April 2026, the increase in NCC support from 60% to 90% came into effect[13]. Separately, on April 16, 2026, the government confirmed plans for electricity bill cuts for over 10,000 British manufacturers under the British Industrial Competitiveness Scheme (BICS), which is part of the Modern Industrial Strategy[9]. Further details on BICS emerged on July 21, 2026, with the scheme intended to reduce electricity costs by up to 25% from April 2027[4]. More clarity on BICS operations, including levy exemptions beginning April 2027 and additional Capacity Market support from October 2027, was provided on September 14, 2026[6].

During the third quarter of 2026, 65 profit warnings were issued by companies listed on the London stock market[1]. Applications for the BICS scheme officially opened on October 1, 2026[3][5][7][8]. On October 18, 2026, UK Steel's analysis highlighted the growing disparity in electricity costs between UK steelmakers and their European counterparts[10][11]. The following day, October 19, 2026, reports detailed the two-year high in profit warnings and the specific challenges faced by steelmakers[1][2]. The application period for BICS is set to close on November 30, 2026[5][7]. Chancellor John Healey's Budget is scheduled for October 28, 2026[1]. A formal review of the BICS scheme is planned for 2030[6].

What Changed and For Whom

The British Industrial Competitiveness Scheme (BICS) aims to cut electricity costs by up to 25% for eligible UK manufacturers starting April 2027[3][4][5][6][7]. This scheme targets more than 10,000 businesses in sectors such as aerospace, defense, and chemical production, which are facing elevated energy prices[3][5][7][8]. BICS will exempt qualifying firms in England, Scotland, and Wales from levies that fund renewable energy and reserve generation, potentially cutting bills by as much as £40 per megawatt hour[7][9]. Businesses that apply successfully during 2026 will also receive a one-off lump sum payment, equivalent to approximately a year's relief[5][7].

Despite these efforts, British steelmakers continue to face competitive challenges[2][10][12]. While the increase in the NCC discount to 90% from April 2026 was welcomed, it primarily affects electricity network charges, not wholesale energy costs[13]. UK Steel stated in October 2025 that while the NCC increase was a step in the right direction, the industry would still face uncompetitive electricity prices for another year, with high wholesale electricity prices remaining a significant barrier[12]. The recent data shows the gap in electricity costs for UK steelmakers versus French counterparts is the highest in three years[2][10].

What the Subject Has Said Publicly

Chancellor John Healey has pledged to use his October 28 Budget to provide “breathing space” for households and businesses[1]. However, he also warned that government resources are limited as the conflict drives up borrowing costs[1].

Business Secretary Jonathan Reynolds urged eligible manufacturers to apply for BICS, stating, “We will reindustrialise Britain by tackling one of the biggest pressures facing manufacturers and cutting their electricity bills”[7][8]. Energy Secretary Miatta Fahnbulleh commented that BICS will help firms “invest, grow and create good jobs”[5].

Gareth Stace, Director General of UK Steel, acknowledged the NCC increase as a welcome announcement in October 2025, but expressed frustration that the steel industry would face “yet another year of uncompetitive electricity prices,” emphasizing the need for reform of wholesale power prices[12].

What We Could Not Confirm

We could not confirm the specific impact of the scheduled business rates cut for small companies on the overall financial outlook for manufacturers[1]. We also could not confirm the precise number of the 65 profit warnings that are directly attributable to rising energy costs versus other factors[1]. While a formal review of BICS is scheduled for 2030, we could not confirm any interim evaluations or reports on the scheme's initial effectiveness or challenges in its early implementation phases[6].