More and more German companies are getting into financial difficulties. The number of company bankruptcies has risen by almost a third compared to the previous year. There is no improvement in sight.
The number of company bankruptcies in Germany has risen again – and significantly. In the first six months of 2024, 11,000 corporate insolvencies were recorded, almost 30 percent more than in the same period last year. This was announced by the credit agency Creditreform. The number of insolvencies thus reached its highest level since 2016.
“In the first half of 2024, companies will continue to struggle against the effects of the recession in 2023, ongoing crises and the weak economic development this year,” said Patrik-Ludwig Hantzsch, head of Creditreform Economic Research. Taken together, this is breaking the necks of many companies. “Corporate stability in Germany is currently more shaky than it has been for many years,” said Hantzsch.
Service sector particularly affected
The number of bankruptcies rose significantly in all sectors of the economy. The service sector was particularly affected, recording 6,500 bankruptcies, an increase of almost 35 percent. There was also a sharp increase in trade (+20.4 percent), construction (+27.5) and manufacturing (+21.5). The number of bankruptcies, especially among larger companies, is far above the level of previous years.
The number of consumer bankruptcies has also risen slightly. At 35,400, there were almost seven percent more reports than in the previous year. According to experts, this is due to inflation and high interest rates. Another reason is an amendment to consumer insolvency law that allows private individuals to be discharged from residual debt more quickly.
The credit agency Creditreform does not expect the situation to improve. “Economic development in Germany is likely to be weak in 2024. Together with the still high interest rates, corporate financing remains a real challenge,” said Hantzsch. He expects that the number of insolvencies this year will exceed the pre-pandemic level for the first time. In 2023 there were 18,000 company bankruptcies, compared to 18,830 in 2019.
Source: Stern
