Profitability Monitor – 2008 Q4

Our regular assessment of the current state of the profitability of British business and the economic factors influencing its prospects for the future, prepared by Roger Bootle, Economic Adviser to Deloitte.

• At the end of last year, profitability (outside the oil sector) was still holding up reasonably well. This looks extremely unlikely to last. With GDP this year likely to suffer its sharpest fall since 1945, I think that profits will fall by a whopping 25% in 2009 as a whole. What's more, this will mask a wide variety of performances amongst individual firms and sectors. Some will actually thrive during the recession, but many more will suffer outright losses. I expect corporate insolvencies to soar above their 1992 peak of 24,000.