British companies generated a wave of profit warnings in the third quarter, with technology firms leading the way, but an economic downturn is unlikely, US accountancy firm Ernst and Young state in a report to be published today. )

The number of profit warnings issued by listed British firms rose dramatically in the third quarter, the first quarterly rise in two years, the Ernst and Young study says.

Fifteen per cent of companies issued at least one warning in the third quarter - 64 per cent more than the previous three months. Software and technology firms topped the list.

We don't believe this huge increase in profit warnings signals the beginning of an economic downturn, said Alan Bloom, head of Corporate Restructuring at Ernst and Young.

Peter Cox, an Ernst and Young partner, said companies would not have an easy time ahead, however.

"I don't think the recent decline in the pound and (high) oil (prices) will significantly increase the prospects of the UK companies."

Companies blamed exchange rates, high overheads, operating costs and increasing core market competition in the 74 profit warnings issued in the third quarter.