Western Europe experiences the most corporate insolvencies since 2016, according to Creditreform.
The number of business bankruptcies in Western Europe reached a record-high since 2016 last year, with a total of 169,496 insolvencies being registered, demonstrating a 20.9% hike from 2022, according to findings by the credit agency Creditreform. This marks the first time since the pre-pandemic levels have been surpassed. Patrik-Ludwig Hantzsch, chief economist at Creditreform, attributed the spike to the ongoing recession. Factors that contributed to this include inflation, interest rates, energy prices, and the pandemic's lingering effects.
Hantzsch forewarned that the grim economic situation will persist in 2024, leading to an even further surge in insolvencies. He further compared the current scenario to the 2009 financial crisis, stating that despite the initial economic recovery, the overwhelming insolvency figures persisted for a considerable time.
Out of the 17 Western European nations assessed, only Denmark, Luxembourg, Spain, and Portugal reported declines in insolvencies. The Netherlands recorded a striking 54.9% rise, while France witnessed a 35.6% jump in the number of bankruptcies. Sweden, Ireland, Finland, Norway, and Germany experienced a surge in insolvencies greater than 20%.
The insolvency rate skyrocketed across all primary economic sectors, with double-digit increments observed. The most notable uptick was experienced in trade (24.8%) and construction (21.7%). The increase was comparatively modest for service providers (16.2%).
The manufacturing industry also witnessed a sharp rise in insolvencies, at 19.8%, surpassing the previous year's figure. However, Creditreform noted that the insolvency figures for industry were still just slightly lower than prior to the pandemic.
In Eastern Europe, the overall insolvency count rose by approximately 8%, with Hungary as the primary driver, according to the study. The region registered around 65,000 corporate insolvencies in 2023 - significantly more than the 60,000 reported in the preceding year. Insolvencies dropped in six of the 12 countries analyzed. The most significant decreases were seen in Croatia (-22.3%) and Latvia (-21.2%). In addition to Hungary, Estonia, Slovakia, Serbia, and the Czech Republic all experienced an increase.
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In 2024, Hantzsch predicts that the high number of corporate insolvencies seen in Western Europe will continue to rise, further exacerbating the ongoing economic challenges. Due to Creditreform's data, Western Europe has experienced the most company bankruptcies since 2016, surpassing pre-pandemic levels.
Source: www.ntv.de
