Interest rates, expensive energy

More and more companies in Germany are going bust

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(Bild: © Markus Mainka (www.aviation-stock.de))

Difficult conditions such as an economic downturn, high interest rates and expensive energy have forced more German companies to go out of business at the beginning of the year. The number of regular insolvencies applied for rose by 26.2 percent in January compared to the same month last year, as reported by the Federal Statistical Office on Friday. In December 2023, the increase was not even half as high at 12.3 percent.

"Double-digit year-on-year growth rates have thus been observed consistently since June 2023," it said. However, the insolvency figures for this period were still slightly below the level of the pre-coronavirus period from June 2019 to January 2020. The regular proceedings are only included in the statistics after the first decision by the insolvency court, and in many cases the actual date of the insolvency application is around three months earlier.

No improvementin sight
 From January to November 2023, the number of company bankruptcies in Germany rose by 23.2 percent to 16,264 cases. The local courts put creditors' claims at around 1.5 billion euros for November alone. "Insolvency activity remains dynamic and will only continue to rise in the coming months," said researcher Steffen Müller from the Halle Institute for Economic Research (IWH).

In addition to the current difficult conditions, the fact that coronavirus aid was more frequently paid out to companies that were already unproductive before the crisis is also likely to play a role. This contributed to very low insolvency figures during the pandemic. However, this aid must now be repaid in a persistently difficult environment. "It is not surprising that this is overburdening many weaker companies," said Müller.

Most insolvencies in transport and warehousing
There were a total of 4.5 corporate insolvencies per 10,000 companies in Germany in November. Most of these were in the transport and storage sector with 9.6 cases. This was followed by other business services (such as temporary employment agencies) with 7.5 cases. In contrast, the number of consumer insolvencies fell in November. It fell by 1.0 percent to 5811. For January to November 2023, this results in an increase of 1.1 percent to 61,460 cases.