Financial insolvencies approaching all-time highs
Many businesses in Germany have been filing for bankruptcy at an alarming rate in the third quarter, as per data from ZDFheute, sourced from the Leibniz Institute for Economic Research Halle (IWH). The report reveals that a total of 3,991 companies went bankrupt, just a few less than the record-breaking 4,071 insolvencies seen in the second quarter of 2010. Experts attribute this surge to the ongoing economic crisis and the lingering aftermath of the pandemic.
Steffen Müller from IWH commented on the situation, stating, "The insolvency rate is currently quite high." The struggling German economy and residual effects from the coronavirus pandemic are the main culprits. During the financial crisis of 2008/2009, businesses were sustained with government aid, leading to a lower-than-expected insolvency rate. Currently, however, scientists predict an even bigger increase in bankruptcies in the future.
Job losses skyrocket
The textile company Soex, which announced its insolvency just a day prior, serves as a recent example. Approximately 400 jobs in Bitterfeld-Wolfen, Saxony-Anhalt are now at risk. FTI Touristik, another significant player, is undergoing a similarly challenging phase. The pandemic's delaying impact is particularly noticeable in this sector, as travel restrictions hampered the industry during the pandemic itself and its recovery was slow.
When businesses go bankrupt, the number of job losses tends to increase drastically. According to ZDFheute, while the number of insolvencies has only risen by 44% compared to last year, the number of job losses has surged by a staggering 127%.
During the third quarter, the real estate industry suffered most due to bankruptcies. The number of insolvencies in this sector soared by 69% compared to the previous year. The area of enterprise-related services also saw an increase, albeit a smaller one, with a 31% jump in insolvencies compared to the previous year.
The economic outlook for Germany is bleak, with experts predicting an even bigger increase in bankruptcies in the future. This is largely due to the ongoing economic crisis and the lingering effects of the pandemic, leading to a high insolvency rate.
Given the surge in bankruptcies, the number of job losses has also significantly increased, with ZDFheute reporting a staggering 127% increase compared to last year.
