The state has used a lot of money and special regulations to prevent a wave of bankruptcies during the crises of recent years. Now more companies in Germany are slipping into bankruptcy again.
Increased costs and a slump in consumption are driving more and more companies in Germany into bankruptcy. After a significant increase in corporate insolvencies in the first half of 2023, experts also expect rising numbers for the next few months.
However, there can be no talk of a “wave of insolvencies”: it is more of a normalization after the billion-dollar support measures of the past few years.
According to the latest official data, the trend in company bankruptcies continues to point upwards. The number of standard insolvency proceedings applied for in August of the current year was 13.8 percent higher than in the same month last year, as the Federal Statistical Office announced. In July there was an increase of 23.8 percent.
The procedures are only included in the statistics after the insolvency court’s first decision, as the Wiesbaden statisticians explained. In many cases, the actual date of the insolvency application was almost three months earlier.
Insolvency numbers likely to continue rising
The Leibniz Institute for Economic Research Halle (IWH), which publishes a monthly insolvency trend, counts 1,007 company bankruptcies in Germany for August. That is 2 percent less than in July of the current year, but 40 percent more than in August 2022. In addition, the number of corporate insolvencies is 8 percent above the August average for the pre-Corona years 2016 to 2019. For the fourth quarter Increasing numbers of insolvencies are likely in 2023.
In the catering industry, for example, one in ten companies is at risk of bankruptcy, according to an analysis by the information service provider Crif. According to August figures, 14,219 restaurants, pubs, snack bars and cafés in this country are considered to be at risk of insolvency, representing 11.9 percent of the almost 120,000 businesses analyzed, according to Crif.
Significantly more company bankruptcies in the first half of the year
The Federal Office now has final figures for the first half of 2023: In the six months, the local courts in this country reported 8,571 corporate insolvencies, 20.5 percent more than a year earlier. According to the courts, the expected claims of the creditors amounted to around 13.9 billion euros. In the first half of 2022 it was around 8.2 billion euros.
Based on 10,000 companies, there were 25.3 bankruptcies in Germany in the first half of 2023. The most insolvencies per 10,000 companies were in transport and warehousing with 54.1 cases. The service industry, which includes temporary employment agencies, for example, was also affected above average with 41.3 cases. The Federal Office found the lowest frequency of insolvencies in the energy supply sector with 2.4 insolvencies per 10,000 companies.
“Inflation, purchasing reluctance, high energy prices and rising financing costs are increasingly causing problems for companies and can hardly be compensated for,” said the partner of the Falkensteg consulting firm, Jonas Eckhardt, in an analysis presented at the end of August. “There is also a catch-up effect due to the extensive government aid in the last two years, which has now expired and kept many companies afloat.”
State aid worth billions will “boomerang”
In recent years, government aid and partially suspended obligations to file for insolvency have kept the number of company bankruptcies in Germany low despite the Corona and energy crisis. In 2022 as a whole, the Federal Office counted relatively few corporate insolvencies at 14,590 cases. In the year of the economic crisis in 2009, there were almost 33,000 company bankruptcies in this country.
“For many companies, the generously distributed state money of the past is now becoming a boomerang,” says the head of Creditreform economic research, Patrik-Ludwig Hantzsch. The credit reporting agency had already reported an increase in company bankruptcies for the first half of the year at the end of June. “The repayments of the aid and sometimes delayed adjustments to the business model lead to a financial and economic dead end with permanently rising interest rates,” said Hantzsch.
According to the Falkensteg analysis, larger companies are currently going out of business much more frequently than at the beginning of the year. With 37 applications in the second quarter, the number of major bankruptcies almost doubled within a year. This means that significantly more employees are affected. According to estimates by Creditreform, 125,000 employees in this country were affected by company bankruptcies in the first half of the year, almost twice as many as a year earlier (68,000).
Consumer bankruptcies decreased
In contrast, according to official figures, there were fewer consumer bankruptcies in the first six months of the current year: 33,140 cases were 1.9 percent fewer than in the first half of 2022. However, given the stubbornly high inflation, experts also expect a noticeable increase in consumer bankruptcies next year at the latest worsening of the situation.
Source: Stern
