Financial Collapses - Additional businesses facing insolvency while no recovery outlined.
The number of bankruptcies for businesses in Germany is persisting to escalate. Experts have yet to observe any indication of a quick turnaround in this trend - quite the contrary: Due to the gradual recovery of the economy, there might be even more business bankruptcies in Europe's largest economy as a whole for the year 2024 compared to what was earlier predicted. This was anticipated since the termination of government aid and unique regulations during the Coronavirus Pandemic.
In the first three months of the current year, there were 5209 companies that filed for bankruptcy, as per the Federal Statistical Office. This represented a 26.5% increase compared to the preceding quarter. The first quarter of 2020 was also surpassed by 11.2%. The quarter from before the crisis caused by exceptional regulations with relatively low bankruptcy rates was Q1 2020.
The curve is keeping on going up: In May 2024, there were 25.9% more regular bankruptcies filed than the preceding year. Since June 2023, there have been double-digit percentage increases in annual comparisons, according to statisticians in Wiesbaden. The proceedings will only become part of the statistics after the initial decision by the bankruptcy court. The precise moment when the bankruptcy application was submitted is frequently several months earlier.
"There are no signs of a shift in this trend. The slow domestic economy and long-standing structural challenges are keeping the country under control," analyzed Marc Evers, an SME expert at the German Industry and Trade Chamber (DIHK). In the most recent DIHK economic survey, more than 24,000 businesses reported tight cash reserves: 29% in the catering industry, 24% in the healthcare sector, and 22% in retail indicated concerns regarding their liquidity.
Most bankruptcies per 10,000 companies in Berlin
Caution is also rising at the Financial Information Service Crif: "There have been double-digit percentage increases in bankruptcy numbers for ten uninterrupted months. It is becoming increasingly hard to refer to an unconfirmed bankruptcy wave," stated Crif-Germany Managing Director Frank Schlein on the latest data.
According to a Crif analysis, the highest bankruptcy density was witnessed in the initial quarter of 2024 with 28 bankruptcies per 10,000 companies in Berlin. The average for the nation was 17. Berlin, Hamburg (22), North Rhine-Westphalia, and the Saarland (each 21) rank above this figure. The fewest business bankruptcies were reported in the first three months of the year in Bavaria, Brandenburg, and Thuringia (each 12 cases per 10,000 companies).
There’s a sliver of optimism in the latest monthly analysis by the Leibniz Institute for Economic Research Halle (IWH). According to this, the number of bankruptcies of individuals and companies in Germany decreased for the first time since November 2023 - by seven percent to 1271 in comparison to the preceding month. "The decline in bankruptcy numbers will carry on in June," predicts IWH researcher Steffen Müller. However, he also calculates that bankruptcy numbers in Germany will remain greater than before the Coronavirus for a longer time.
Specialists estimate that the number of bankruptcies in Germany for this year could reach around 20,000 cases. Due to the Coronavirus, sky-high energy prices, and increasing interest rates, more and more businesses in Germany are finding themselves in an uncertain situation. The Statistical Federal Office reported 17,814 corporate bankruptcies in 2023. This is a rather low figure in historic terms: In the year 2009 during the financial and economic crisis, almost 33,000 companies in this country slid into bankruptcy.
Read also:
- The escalating trend of company bankruptcies in Germany, as highlighted in the latest data from Destatis in Wiesbaden, is causing concern across Europe, with experts predicting an increase in business insolvencies in Europe's largest economy for the year 2024.
- The city of Berlin has reported the highest number of bankruptcies per 10,000 companies among all German regions in the first quarter of 2024, according to an analysis by Crif-Germany.
- Despite the recent decrease in bankruptcy numbers in Germany, as reported by the Leibniz Institute for Economic Research Halle, experts still anticipate that the number of business insolvencies in the country will remain higher than before the Coronavirus pandemic for an extended period.
- The German Industry and Trade Chamber (DIHK) reveals that more than 24,000 businesses have reported tight cash reserves, with concerns about liquidity in sectors like catering, healthcare, and retail.
- During the Coronavirus Pandemic, unique regulations and the termination of government aid have contributed to the surge in company bankruptcies in Germany, making it challenging for businesses to recover without significant financial support.
