Significant surge in bankruptcies observed.
In the initial half of 2024, an alarming surge of 3,100 additional corporate bankruptcies occurred in Germany, marking a substantial 30% jump compared to the previous year. Particularly, businesses in the service industry took a hard hit.
The steep rise in corporate bankruptcies in Germany continues, with an unprecedented 11,000 companies filing for bankruptcy in the first six months of 2024. This startling figure signifies a 2,700-plus increase from the previous fiscal year, as reported by Creditreform Economic Research. The last time insolvencies peaked this high was back in 2016.
Patrik-Ludwig Hantzsch, the head of Creditreform Economic Research, comments on the grim situation, stating, "Businesses are still battling the after-effects of the economic downturn in 2023, ongoing crises, and sluggish economic growth this year, leading to a staggering number of failures." Hantzsch further emphasizes, "The economic stability in Germany is as shaky as it has been in years."
Insolvencies have risen across all economic sectors, but the service industry felt the brunt of it most, with 6,500 bankruptcies, signifying a 35% increase. The retail sector saw a 20.4% rise, the construction industry experienced a 27.5% surge, and the manufacturing industry witnessed a 21.5% increase. Notably, insolvency activity among larger companies is significantly higher than in recent times.
Consumers are not faring better
A slight upward trend is also observed in consumer bankruptcies, with 35,400 filings, which represents a 7% increase from the previous year. Experts attribute this to escalating inflation and high-interest rates. Additionally, the introduction of a new consumer bankruptcy law enabling private individuals to swiftly discharge their debts is also contributing to the rise.
Creditreform does not foresee an improvement in the near future. Hantzsch predicts, "Based on all forecasts, the economic growth in Germany will remain weak in 2024. Combined with the persistently high interest rates, business finance remains a significant hurdle." He anticipates corporate bankruptcies to surpass the pre-pandemic level for the first time this year. In 2023, there were 18,000 corporate bankruptcies, while in 2019, the count stood at 18,830.
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The company's struggle with insolvency is not isolated, as the number of corporate bankruptcies in Germany has skyrocketed, with over 11,000 companies filing for bankruptcy in the first half of 2024.
Due to the challenging economic conditions, the threat of insolvency is also looming over many businesses, leading Creditreform Economic Research to predict an increase in corporate bankruptcies surpassing the pre-pandemic level in 2024.
