The number of profit warnings issued by UK-listed firms is at a six-year high as fears grow that the UK could be heading for recession.

Research by Ernst & Young revealed that there were nearly 400 such warnings in 2007, a 10% rise on the previous year.

Much of this increase was due to the final quarter of the year, which was 20% above 2006 figures, as the impact of the global credit crunch began to take hold.

Ernst & Young warned that 2008 would be a tough year although it added that it was still unclear as how severe a slowdown would be.

"The era of easy credit is over and in 2008 retail sales growth will stall as the discretionary spending comes under pressure," said Andrew Wollaston, corporate restructuring partner at Ernst & Young.

"Corporate activity and restructurings of poorly performing retailers look inevitable in the year ahead."