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15 August 2017

‘Rocky road’ for British PLCs despite profits boost

One of Britain's leading stockbroking firms is warning UK businesses of rough times ahead, despite official figures showing significantly improved profits.

According to The Share Centre's profit watch report, annual pre-tax profits across public companies are at £22.7 billion over the past year - up 41%.

Revenues have also seen a fairly rapid incline, showing a 5.7% increase to reach £346.1 billion. This is the fastest rate increase since 2014.

However, the report - which covers FTSE 350 firms - forecasts that steeper prices on household expenditure means some businesses could start to struggle as the economy slows down.

"Looking ahead, the picture is much murkier," said Helal Miah, an investment research analyst at The Share Centre.

"Since the beginning of the year, the domestic economy has slowed markedly, sparking a succession of profit warnings."

Mr Miah says businesses are enjoying a revenue bubble and consumers have been "living on borrowed time, and borrowed money", warning PLCs will soon begin to feel the pinch.

"The UK economy is slowing, so even those companies that performed extremely well recently may not continue to do so," he adds.

"Companies with significant overseas representation are likely to experience better growth prospects, the report suggests, as global firms experience an upswing in worldwide demand."

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