Sunday, a research from the Ernst & Young showed that the number of UK companies issuing profit warnings in the first quarter of 2009 stood at 117, the highest level since 2001. The number stayed above 100 for the third straight quarter, signaling heightened distress in the UK economy.

The highest warning sectors were Support Services, Media, Industrial Engineering and Software & Computer Services and General Financial. The broad category of industries indicates the spread of the credit crisis into a full-blown recession, now passing down the credit and supply chains from financial services to other areas.

Keith McGregor, Restructuring partner at Ernst & Young said, The prospects for 2009 appear as uncertain and as gloomy as at any point in the crisis. Green shoots will find it hard to flourish in such stony ground; we still believe that the worst of the downturn for many companies is yet to come.

According to Keith McGregor, governments and central banks also have little room to manoeuvre in their fight against recession even before the impact of diminishing tax receipts truly hits home. The toxic mix of the continuing credit crunch, along with a global economic downturn, is exposing corporate frailties and accelerating cost cutting and retrenchment.

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