The IFT Quarterly Update Q1 2025: mixed picture amid uncertainty and multiple pressures on businesses

The IFT’s latest quarterly snapshot for Q1 2025 showed a mixed picture for turnaround and restructuring activity in the quarter:  67% of IFT partners responding to the survey were busier in Q1 than in Q4 2024, 17% seeing about the same level of activity and 17% a decrease in activity.

In sector terms, the busiest sector for IFT partners was the financial services sector, but there were also high levels of activity across a number of other sectors including energy, automotive, retail and technology. Interestingly levels of turnaround and construction activity in the construction sector had fallen compared to previous quarterly surveys. This is the first quarter in which some of our IFT partners have reported seeing a decrease in activity, though it is unclear the reasons behind this. It could reflect the highly uncertain wider environment weighing on businesses’ ability to decide which approaches to implement, or a more positive quarter (with UK GDP growth of 0.7%) with sales and investment “crowded in” before the impact of policies such as tax changes or implementation of tariffs.

Company data from FRP showed continued decline in insolvency numbers, decreasing by 7.5% compared to Q4 2024, but numbers of companies in distress continued to grow, increasing by 2.2% in Q1 2025. The same sectors as Q4 2024 showed the highest numbers of insolvencies (construction, accommodation and food service activities and administrative and support service activities) and companies in distress (construction, professional, scientific and technical activities  and retail and repairs).

The demand for turnaround support being greatest in financial services may reflect some of this volatility as well as cost increases putting pressure on people-heavy professional services firms, as seen in the wider distress data.  Looking more broadly, the spread of sectors seeking support reflects the wide-ranging impact of both geopolitical and policy factors. Factors cited by IFT partner firms as reasons for business distress in Q1 included debt maturity as the most common, closely followed by a number of other matters which were frequently seen by IFT partner firms, including inflationary pressures, the cost of servicing debt, the depletion of working capital, supply chain issues and withdrawal of shareholder support and funding.