In the first six months of this year, almost 25 per cent more companies in Germany filed for insolvency compared to 2023, with experts fearing that the worst is yet to come.
August alone saw a rise of 10.7 per cent in regular insolvency proceedings filed in Germany compared to the previous year according to the Federal Statistical Office (Destatis).
“Except for June 2024 (+6.3 per cent), the growth rate has thus been in the double-digit range since June 2023,” the agency said.
Insolvency expert Jonas Eckhard warned the situation is likely to deteriorate further.
“The second half of the year promises a storm of company bankruptcies,” he told German newspaper Die Welt.
The Destatis numbers aligned with predictions made by Allianz Trade, the world’s largest credit insurer.
On September 10, the firm said it expected a significant increase in insolvencies in Germany again this year.
It estimated bankruptcies would increase by 21 per cent to around 21,500 cases, after a 22 per cent increase last year.
Allianz noted a significant rise in major corporate insolvencies involving companies with an annual turnover of at least €50 million, calling that “alarming”.
In the first half of 2024, there were 40 such bankruptcies — the highest number for the period since 2015 and more than a third up on the same time last year.
“Right now, when companies fail, they tend to fail in a big way,” said Milo Bogaerts, head of Allianz Trade for Germany, Austria and Switzerland.
Major insolvencies often trigger a domino effect, disrupting supply chains and putting other companies at risk, Business Insider noted
The construction industry, retail — especially fashion and textiles — and the service sector are particularly sensitive to such.
Local courts in Germany reported 10,702 business insolvencies filed so far this year according to final results, marking an increase of 24.9 per cent compared to the first half of 2023, Destatis reported.
Creditor claims from these corporate insolvencies were estimated at approximately €32.4 billion, rising from around €13.9 billion in the same period of 2023.
Per 10,000 German companies, 31.2 went belly up in the first half of 2024, the report said.
Most insolvencies were in the transport and storage sector. That was followed by the construction industry, other economic services (for example temporary-employment agencies) and the hospitality industry.
During the same six months of 2024, there were 35,371 consumer insolvencies — customers unable to pay their debts — an increase of 6.7 per cent compared to the year before.
In calculating the frequency of insolvencies, information from the statistical business register on the number of companies was used.
Germany’s economy is facing challenges that threaten the viability of its growth model, a report has claimed. https://t.co/KzbKXudWPh
— Brussels Signal (@brusselssignal) August 6, 2024
