Geopolitical disruption deepens distress across EMEA industries
97% of survey respondents based in EMEA believe that strained trade relations, global conflicts, and regulatory and legislative changes will directly lead to corporate distress.
LONDON (11th June 2025) - In a year marked by heightened geopolitical tensions, the AlixPartners 2025 Turnaround and Transformation Survey shows an economic landscape fraught with challenges.
Our comprehensive poll of industry experts in EMEA dives into the sectors most likely to face distress, the factors driving economic turbulence and the trends shaping the future with potential for opportunity. The survey, now in its 20th year, includes our recommendations to tackle these challenges.
Key Insights:
- EMEA restructuring professionals believe the industries most affected by tariffs –
- automotive, retail, manufacturing – top the list of those expected to face distress in 2025.
- Nearly two thirds (63%) of EMEA restructuring professionals expect economic growth to decline in the coming year.
- A large majority in EMEA (75%) expect the number of out-of-court restructurings to increase over the next 12 months.
- Rapid advances in AI technology are viewed overwhelmingly as an opportunity by more than 80% of respondents in EMEA, demonstrating the significant role of AI in restructuring.
Geopolitical disruption
Strained trade relations and global conflicts, compounded by regulatory and legislative changes, will directly lead to corporate distress, according to 97% of survey respondents in EMEA. More than a dozen countries globally have changed governments over the past year. EMEA restructuring professionals say geopolitical disruption is the primary factor driving corporate distress now - and will continue to be over the next 12-24 months. This finding is supported by the view of 70% of respondents in EMEA, who believe that global supply chain disruption will increase in the next 12 months.
Economic headwinds intensify
The prevailing view of turnaround professionals is that continued economic uncertainty underscored by shaky consumer confidence will drive future corporate distress. Almost two thirds (63%) of EMEA respondents expect a decline in global economic growth over the next 12 months. That jumps to 70% of respondents globally, and 80% of U.S. respondents. Notably, nearly three-quarters (71%) of EMEA respondents expect a recession in their own region within the next two years. Furthermore, the majority (60%) expect inflation to increase this year across the region, likely a sign that restructuring experts expect tariffs will continue to pressure economic growth. A large majority (72%) of EMEA restructuring professionals expect company workforce sizes to decrease, indicating widespread anticipation of job cuts or downsizing.
Automotive, retail, and manufacturing expected to be most distressed
Industries already grappling with supply chain instability, margin pressure, and structural changes – manufacturing, retail, energy, and logistics – are now being forced into survival mode. The automotive industry emerges as the most vulnerable sector in EMEA, with 82% of respondents indicating it will be one of the industries most likely to face distress in 2025. Auto is followed by retail (43%) and manufacturing (36%).
Tight credit markets remain a headwind
Expectations of credit tightening are rising this year in EMEA, reflecting renewed concern about higher inflation. Companies facing turnaround or transition are primarily challenged by sufficient liquidity/capital, according to the majority (62%) of survey respondents. This is followed by debt management (49%) and cost reductions (46%). Three in five (61%) survey respondents say the cost of capital for buyers and borrowers will increase this year, hinting at potential expectations for interest rate rises.
99% of turnaround execs said kicking the can without a plan is not sustainable
A large majority of respondents (75%) believe the number of out-of-court restructurings will increase over the next 12 months from the timing of the survey (March 27-April 13, 2024). Yet, the survey warns that workouts without a clear recovery path could lead to bigger issues down the road. Industry sentiment is clear: amend & extend and liability management exercises (LMEs) are seen as stopgap measures, not sustainable solutions. Virtually all survey respondents in EMEA agree that LMEs are temporary, and half (50%) believe they do not ultimately fix the underlying operational problems. Additionally, there's industry consensus that distressed companies that extended their liquidity runway through amend & extend approaches or raising additional capital in 2024 and 2025 will end up distressed again within three years.
Glimmers of optimism with AI
AI is increasingly viewed as a strategic lever for distressed businesses. Embracing AI is now seen not only as valuable but as potentially critical to survival and recovery. This optimism underscores the potential for AI to drive innovation and efficiency in distressed businesses. Almost 80% of EMEA restructuring leaders say the rapid advances in AI technology should be viewed by a distressed business as an opportunity.
Simon Appell, EMEA Co-Leader of Turnaround & Restructuring Services, commented:
"With geopolitical tensions creating long-term economic consequences for the global market, it is plain to see why many EMEA restructuring professionals are finding themselves at a crossroads. The current environment is once again creating profound uncertainty as global supply chain disruptions and evolving international trade policies create significant barriers for businesses trying to stay afloat. However, amid such pressurised situations lies the opportunity for businesses to emerge far more robust. The importance of trust, communication, agility and collaboration cannot be understated in situations like these."
Axel Schulte, EMEA Co-Leader of Turnaround & Restructuring Services, commented:
"While businesses may be tempted to pause for thought amid the tough macroeconomic and market conditions, this should not extend to a state of paralysis - there are indeed opportunities for companies to think and act strategically. 40% of our survey respondents, for example, expect workforce costs to increase, which will require more than cost-cutting, instead demanding more adaptive workforce strategies and a willingness to confront a list of operational shortcomings. Productive capacity is just as critical as cost control. Above all, what is needed is a holistic view of the business: one that balances operational efficiency with capability and continuity."