E&Y Says U.K. Firms To See 'Bumpy' Recovery

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U.K. companies are bracing themselves for a bumpy recovery, Ernst & Young said in a report released on Sunday. The accountancy firm noted that the number of profit warnings dropped in the final quarter of 2009.

There were 50 profit warnings from quoted U.K. companies during the last quarter of 2009, compared to 126 in 2008, marking a year-on-year fall of 60%. According to Andrew Wollaston, restructuring partner at E&Y, it is not the end of the story as rapid recovery costs huge amount of money.

The firm said 2010 looks set to be a year of contradiction for the U.K. economy and warned that early optimism surrounding the return to economic growth will sit in stark contrast to looming fiscal realities.

"The start of the year should see a return to growth for the economy," the firm cautioned. "However, that growth will be hard to sustain in the face of some strong headwinds."

E&Y expects the end of the Bank of England's quantitative easing to add to the uncertainty and strain. "Growth in the first part of the year could sit in contrast with economic stagnation or even a second dip later on," Keith McGregor, restructuring partner at E&Y commented. "The events in Dubai at the end of 2009 amply demonstrate how quickly situations can still deteriorate. The coming years could contain more of these shocks," he added.

U.K. companies are bracing themselves for a bumpy recovery, Ernst & Young said in a report released on Sunday. The accountancy firm noted that the number of profit warnings dropped in the final quarter of 2009. (Market News Provided by RTTNews)