More and more companies in Germany are giving up. Experts had expected this development after the expiration of the special Corona regulations. Is a wave of bankruptcies now looming?
The number of company bankruptcies in Germany continues to rise. Experts see no signs of a rapid turnaround – on the contrary: Because the economy is only slowly emerging from the weak phase, there could even be more corporate bankruptcies in Europe’s largest economy in 2024 than previously predicted. It was expected that the numbers would rise after the expiration of state aid and special regulations during the corona pandemic.
In the first three months of the current year, 5,209 companies filed for bankruptcy, according to the Federal Statistical Office. That was a good quarter (26.5 percent) more than in the same quarter last year. The figure for the first quarter of 2020 was also exceeded: by 11.2 percent. That was the quarter before the Corona crisis, which was characterized by exceptional regulations, with comparatively low bankruptcy figures.
Weak economy speaks against a rapid turnaround
The trend continues upward: In May 2024, 25.9 percent more regular insolvencies were filed than a year earlier. Since June 2023, double-digit growth rates have been observed year-on-year, according to the Wiesbaden statisticians. The proceedings are only included in the statistics after the first decision of the insolvency court. In many cases, the actual time of the insolvency application is almost three months earlier.
“There are no signs of a turnaround. A weak domestic economy and tangible structural challenges continue to keep the economy in its grip,” analyzed Marc Evers, SME expert at the German Chamber of Industry and Commerce (DIHK). In the most recent DIHK economic survey, many of the more than 24,000 companies reported tight budgets: 29 percent in the catering industry, 24 percent in the health industry, and 22 percent in the retail sector are worried about their liquidity.
Most company bankruptcies per 10,000 companies in Berlin
Pessimism is also growing at the financial information service Crif: “For ten months in a row, there have now been double-digit percentage growth rates in the number of insolvencies. It is therefore becoming increasingly difficult to speak of a non-existent wave of insolvencies,” said Crif Germany Managing Director Frank Schlein, commenting on the current figures.
According to a Crif analysis, the highest insolvency density in the first quarter of 2024 was in Berlin, with 28 insolvencies per 10,000 companies. The national average was 17. In addition to Berlin, Hamburg (22), North Rhine-Westphalia and Saarland (21 each) also rank above this value. The fewest company bankruptcies in the first three months of the year were in Bavaria, Brandenburg and Thuringia (12 cases per 10,000 companies each).
Economic researchers also see positive signals
The latest monthly analysis by the Halle Leibniz Institute for Economic Research (IWH) offers some hope. According to it, the number of insolvencies of partnerships and corporations in Germany fell in May for the first time since November 2023 – by seven percent compared to the previous month to 1,271. “The downward trend in the number of insolvencies will continue in June,” expects IWH researcher Steffen Müller. However, he also expects that the number of insolvencies in Germany will remain above the pre-coronavirus level for some time to come.
Experts expect the number of company bankruptcies in Germany to rise to around 20,000 cases this year. Weakened by the Corona years, high energy prices and increased interest rates, more and more companies in Germany are getting into trouble. The Federal Statistical Office had counted 17,814 corporate bankruptcies for 2023. Despite an increase of a good fifth, this was a comparatively low figure in a long-term comparison: In 2009, during the financial and economic crisis, almost 33,000 companies in this country slipped into insolvency.
Source: Stern
