European companies are set to issue a wave of profit warnings in the coming months as earnings are expected to fall by about 40 per cent by the end of 2009.

Executives at companies in continental Europe and the UK are increasingly gloomy about the prospects for 2009 and many expect a prolonged recession before a slow recovery starting in 2010. But consensus forecasts for earnings next year – compiled by industry analysts who are often briefed by companies – still point to a 10 per cent increase in profits in Europe, whereas equity strategists think there will be a 30-40 per cent fall.