All regions of the UK have seen a rise in business distress, with Wales seeing the biggest increase.
The Institute for Turnaround (IFT) has released its sixth Societal Impact report, surveying its members and highlighting that UK corporate distress shows no signs of easing, particularly in the energy sector, with ongoing market turbulence and the potential for further disruptions stretching many businesses to the limit.
Despite a reduction in insolvencies compared to 2024 figures, the report’s key finding showed that the number of distressed businesses registered across UK regions has shown little to no sign of change since a 10% uptick recorded in last year.
But the IFT said that even with the challenges, IFT members have delivered significant positive outcomes for UK businesses throughout 2025, including:
- £2.8 billion in added shareholder value generated by independent members
- Over £2 billion of new money into turnaround projects worked on by IFT members to support business turnaround
- 59,562 jobs safeguarded, enabled by IFT members’ turnaround expertise, representing a slight increase over the previous year
However, stress across sectors has become the norm in recent years, and IFT members predict a broad set of headwinds set to hit businesses hard over the next six months, including inflationary pressures (51%), management fatigue (50%) and jointly political change and uncertainty and the need to change business models to match conditions (36%).
Real estate and energy have seen the biggest percentage increases in distress between 2024-25, posting growth of 22% and 20% respectively. However, in terms of hard numbers IFT members still see retail, construction, and professional services as the sectors with the largest numbers of distressed businesses, which have consistently been the top three in recent years.
Regionally, every single part of the UK saw an increase in business distress, with Wales seeing the biggest increase amongst major UK regions, with numbers of distressed businesses up 10% from Q.2 2024 – Q.2 2025. London saw a similar increase (+9%), whilst the North East and Yorkshire proved the most resilient (up 3% and 1%, respectively).
Nearly two-thirds of IFT Independent Members (60%) expect to be busier in future, with over three-quarters (76%) of IFT members expecting turnaround demand to rise in 2026.
As conditions remain difficult, this report suggests there’s a definite role for turnaround professionals as companies look to change and adapt business models to match current conditions, the IFT said.
Looking at where this demand will manifest, members highlighted governance and organisational changes as a key focus, with three-quarters stating that this is where their services have been required on their most recent assignment, followed by changing the organisational structure (72%). Over the past year, whilst nearly three-quarters have needed to support businesses with short-term survival, including with cost reductions and cashflow forecasting (both 73%), 75% said their top focus in the past year has been in supporting boards to create strategic change.
Encouragingly, this indicates many organisations are seeking turnaround professionals before it’s too late, yet the IFT said it still sees many businesses not accessing the support required at an early enough stage.
Almost four-fifths of IFT independent members (77%) observe cultural and psychological blocks as a key obstacle to accessing turnaround support, followed by a lack of understanding regarding turnaround and nearly six in ten businesses being unaware of issues until it’s too late.
Milly Camley, CEO at The IFT said:
“This report really shines a light on the positive and transformative effect that our members’ work has on business, individually and collectively. As economic waters remain choppy, punctuated by socioeconomic uncertainty, fluctuating prices and wafer-thin margins, turnaround professionals across the country are working tirelessly to ensure companies not only overcome their problems, but can build on them too. The stats speak for themselves, but distress remains eye-wateringly high which indicates there’s a lot more work for our members to do to drive these levels down.”
Claire Burden, Chair at The IFT added:
“If there’s a key takeaway for businesses reading the report, it is the opportunity for businesses to work with expertise to manage their way through challenges and build resilience. This is particularly important at the smaller end and supports the growth and competitiveness of UK plc. It is an uncertain time for businesses but as our report emphasises, by focusing on areas and issues within your control you are better able to weather broader challenges and build resilience and agility into your organisation.”
