Nearly 400 warnings about disappointing profits were issued in 2007, up by more than 10% on the previous year, according to research by Ernst & Young shows.

The final quarter saw the highest rise of all, up by more than 20% on 2006, largely due to the credit crunch.

The retail sector suffered badly, last year with a record breaking 47 profit warnings, and so too did the leisure industry, including pub chains.

One in five warnings blamed the fallout from the US sub prime mortgage crisis and the credit crunch.

In the final quarter of 2007, support services issued 22 profit warnings; the retail sector 12; media firms 10; software and computer services nine, and travel and leisure companies eight.

Ernst & Young warned that businesses relying on the credit markets or consumer spending are likely to struggle most in the coming year.