The Institute for Turnaround (The IFT) has released its fifth Societal Impact report, surveying its members and highlighting that UK corporate distress shows no signs of easing, despite some increased economic stability.
This year, the number of distressed businesses across UK regions has risen by nearly 10% on average, representing a staggering 60% increase since 2017. Wales reported the highest year-on-year increase in distressed companies (17%), with the South West also experiencing significant challenges, reporting a 13% rise.
Despite the challenges, IFT members have delivered significant positive outcomes for UK businesses in 2024, directly contributing to the greater resilience of UK plc.
Key findings are:
- £3.1 billion in added shareholder value generated by independent members.
- 56,000 jobs were safeguarded, enabled by independent turnaround expertise, a slight increase over the previous year.
- Over 80% of IFT members report activity levels comparable to or busier than in 2023.
- Nearly four-fifths (78%) of members expect further growth in turnaround activity in 2025.
Looking at service hotspots, the majority (61%) of IFT members continue to focus on business transformation as a key area of their work, supporting businesses to adapt, transform and succeed in the longer term.
Despite a decline in insolvency rates since 2023, distress remains pervasive, with nearly half (46%) of IFT members forecasting an increase in company failures due to the current operating environment. Key challenges contributing to this outlook include servicing high levels of debt, the depletion of working capital and difficulties accessing further funding.
The IFT members consider that the biggest challenges for distressed but viable companies in the coming months will be internal ones, such as board bandwidth or fatigue (40%) and the depletion of working capital (37%).
When asked why businesses in distress fail to seek support at an early stage, 81% continue to cite cultural and psychological resistance to external advice as the primary barrier. This was closely followed by a lack of awareness of difficulties (62%) and understanding regarding the turnaround process.
Other findings from the annual report include:
- All areas of the UK saw an increase in the number of distressed companies (ranging from between 7% and 17%).
- Companies in the Wales & Borders region have seen the biggest jump in corporate distress, rising 17% year-on-year, followed by the Isle of Man and the South-West of England
- London overtook the South East to become the leading region for insolvencies, with 3,295 company insolvencies Q1-Q3 2024.
- The top three sectors for both distress and insolvencies remained wholesale, retail and repairs, construction, and professional, scientific and technical activities, with construction seeing the highest number of insolvencies.
- Manufacturing remains the dominant sector for IFT members, followed by construction. The automotive sector has also risen in turnaround activity rankings for IFT independent members, moving from ninth to third place, as regulatory changes have pressured the industry.
Milly Camley, CEO at The IFT said:
“Wales and the South West have always been regions of resilience and innovation, but the scale of the challenges this year has tested even the most robust businesses. From rising costs to shrinking consumer confidence, the pressure on leadership teams is intense.”
“Although, what we often see is that even in the toughest circumstances, businesses that act decisively can regain control. Whether it’s streamlining operations, securing funding, or building a more agile strategy, solutions are available. The key is not waiting too long to take that first step. Turnaround support isn’t just about firefighting—it’s about helping businesses rebuild stronger foundations for the future.”
Claire Burden, Chair at The IFT and Wales and South West spokesperson, added:
“Wales and the South West are facing a perfect storm. Industries that underpin the local economy, including construction and retail, are under immense strain due to rising costs and stagnating demand. In Wales, where businesses tend to be smaller and community-focused, the impacts can be deeply personal, affecting not just companies but families and livelihoods.”
“In the South West, businesses have been struggling to keep up with rapid changes in the economic environment, and many leaders tell us they feel overwhelmed. In addition, a very late onset of warmer weather over the summer of 2024 severely affected the hospitality sector in places such as Devon and Cornwall, leading to reduced revenue at a critical time of year. The good news is that we’ve seen companies turn things around when they act quickly—whether by restructuring debt, renegotiating contracts, or simply getting better visibility over their finances.”
The IFT’s work continues to be a critical lifeline for UK businesses. To learn more about these findings, access the full report here.
