185,000 companies remain in financial distress despite insolvencies fall

New research by the Institute for Turnaround (IFT) finds that more than 185,231 companies remain in financial distress, despite insolvencies falling year-on-year, as turnaround professionals anticipate growing demand for support.

The East Midlands recorded the largest rise in distressed companies from Q2 2025 to Q2 2026, up 22% and much higher than the other regions. East Anglia recorded a 21% decrease in distressed companies. Regions including Wales, London, Northern Ireland and Yorkshire showed small increases, whilst Scotland, the South West, North East and North West saw smal decreases in the number of distressed companies.

Distress increased most in public administration, defence, and social security1 by 11%, financial and insurance activities, 8% and manufacturing 5%, from Q2 2025 to Q2 2026. Distress reduced in accommodation and food services by 1%, arts, entertainment and recreation (3%) and education by 5% from Q2 2025 to Q2 2026.

Operational change was widespread, with 67% of IFT independent members changing a business’ organisational structure in their most recent successful assignment.

The report found that 79% of turnaround professionals expect demand for their support to rise, with inflation, management/board fatigue and energy prices the biggest pressures going into 2027.

The most common interventions over the last year reported by IFT independent members were cost reductions (74%), cash flow forecasting (71%) and helping boards create strategic change (67%).

Milly Camley, CEO at The IFT said “UK businesses continue to operate in an environment of sustained economic and geopolitical uncertainty, but the report also demonstrates their underlying resilience and the value that effective turnaround can preserve. Businesses cannot always wait for certainty before acting. Early responses to challenges can protect jobs, skils and productive capacity, while giving viable companies a stronger platform for future growth. Turnaround should therefore be recognised not simply as a response to distress, but as an essential part of the UK’s approach to productivity, growth and economic resilience, including national priorities such as reindustrialisation, housing delivery and technological development.”

Claire Burden, Chair at The IFT said “This report shows that, despite persistent pressure across the economy, viable UK businesses retain significant strengths and potential. Timely access to experienced turnaround support can protect jobs, preserve valuable capabilities and help organisations adapt for the future. As we mark 25 years of the IFT, it is clear that turnaround and transformation have a vital role to play not only in addressing immediate challenges, but in building stronger businesses and supporting growth and innovation across the UK.”