Economy: Number of company bankruptcies continues to rise in double digits

The number of company bankruptcies in Germany continues to rise in double digits. Significantly more companies filed for bankruptcy in October than a year earlier. Based on preliminary data, the Federal Statistical Office registered a 22.9 percent increase in registered procedures compared to October 2023.

It is still unclear whether these cases will actually be taken by the insolvency courts to the point where they will be included in official statistics. However, the trend has been pointing upwards for months: with the exception of June 2024, the growth rate in bankruptcy filings has been in the double-digit range since June 2023.

Economic weakness and cost explosion

“The current wave of insolvencies is the result of a perfect storm of prolonged economic weakness and drastically increased costs,” says IWH researcher Steffen Müller. In its latest monthly analysis of the development of insolvency figures, the Leibniz Institute for Economic Research Halle (IWH) reports a sharp increase in the number of bankruptcies in October to 1,530 cases. The last time more insolvencies of partnerships and corporations were registered in that month was in 2004.

“Many weaker companies that survived during the low interest rate phase and with support during the pandemic are now under massive pressure as costs have risen sharply,” explains Müller. “This is now driving highly indebted companies in particular into insolvency.”

20,000 company bankruptcies expected

After the special Corona regulations expired, experts had expected an increase in company bankruptcies in Germany to around 20,000 cases in the current year. In 2023 as a whole, the Federal Statistical Office counted 17,814 company bankruptcies. Despite an increase of a good fifth, this was a comparatively low value in a long-term comparison: in 2009, during the financial and economic crisis, almost 33,000 companies in this country slipped into insolvency.

According to the Federal Statistical Office, the local courts reported 14,403 corporate insolvencies in the period from January to August of the current year. That was almost a quarter (around 23 percent) more than in the same period last year. In August alone there were 1,764 cases, 13.4 percent more than a year earlier. The hospitality industry, among others, is particularly affected.

Federal Statistical Office: Time series of insolvencies Federal Statistical Office: Business advertisements and insolvencies Insolvency trend IWH Halle Federal Statistical Office Insolvencies 10/2024