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Germany Faces Rising Insolvencies Amid Economic Strain
2024-10-15 09:00:12
Economy
Business
Finance

Germany Faces Rising Insolvencies Amid Economic Strain

Germany is witnessing a surge in corporate bankruptcies, reaching levels not seen in over a decade. The forecast for 2024 and 2025 predicts even more insolvencies, impacting both employees and businesses.

Factors such as export risks, refinancing difficulties, and leftover debts from pandemic-era loans are contributing to financial stress. The construction, retail, and service sectors are particularly affected, with over 1.6 million jobs potentially at risk.

While some medium-sized firms remain financially resilient, the overall economic landscape remains challenging. Credit conditions have tightened, with a significant portion of businesses reporting difficulties in securing loans.

Economists anticipate that relief might only come by 2026, when a slight decrease in insolvencies is expected. Until then, companies are encouraged to invest in sustainable practices to weather this turbulent period.

Related news on that topic:

Challenges Facing Traditional Industries Amidst Rising ... Insolvencies

The insolvency of Anhaltische Elektromotorenhersteller (AEM), a historic company employing 150 people, highlights the struggles facing traditional industries in Germany. Managing Director Reiner Storch is actively seeking new investors to navigate this crisis. Current economic conditions are dire, with insolvencies at record levels, as noted by the Leibniz Institute for Economic Research. Experts warn of further increases due to factors such as weakened economic performance, customer payment issues, and rising energy costs. The mood among entrepreneurs has deteriorated significantly, marking a concerning trend for the future of the German economy. As companies grapple with these challenges, the path to recovery remains uncertain.

Challenges Facing Medium-Sized Companies in Germany

In 2022, medium-sized companies in Germany faced significant challenges, recording a revenue loss of 4.6%, equating to a real decline of 10%. Their equity ratio slightly dropped to 30.6%, highlighting financial strain. Despite this, employment increased, with 32.83 million individuals employed, a rise of 494,000 from the previous year. Investment willingness fell to 39%, reflecting growing uncertainty in the market. Meanwhile, the return on sales remained stable at 7.0%. Many companies, particularly smaller firms, struggled with credit negotiations, indicating a tightening financial environment. Economic experts attribute these difficulties primarily to cyclical factors, with many firms bracing for further revenue declines in the near future.

Read 7 more recent news on this topic

The press radar on this topic:

DER SPIEGEL
15. Oktober 2024 um 05:29

Insolvencies: Credit Insurer Revises Forecast - More Corporate Bankruptcies Than Expected This Year - DER SPIEGEL

Economy
Finance
Insolvencies: Credit Insurer Revises Forecast - More Corporate Bankruptcies Than Expected This Year - DER SPIEGEL
Allianz Trade, a credit insurer, dampens hopes for a rapid economic recovery. The number of corporate insolvencies in Germany will rise by 25% to 22,200 in 2023, instead of the previously expected 21% increase to 21,500. A 4% increase to 23,000 insolvencies is also forecast for 2025. Many companies are struggling with sluggish demand, higher wages, declining competitiveness, loans from the coronavirus period, growing export risks, and more expensive refinancing, coupled with poorer payment mor..
EuroNews
15. Oktober 2024 um 05:13

German companies struggle to secure loans as economic uncertainty persists

Economy
Finance
German companies struggle to secure loans as economic uncertainty persists
German firms face tightening credit conditions, with the IFO's Credit Constraint Indicator at a 7-year high. 32.9% of 2,000 surveyed businesses reported restrictive bank behavior, up from 27.1%. Sectors like services and industry saw sharp increases, while construction, wholesale, and retail saw declines. IFO's Professor Wohlrabe cites lack of orders, economists Born and Meier cite uncertainty, default risk, and high debt costs. Germany's economy minister forecasts 0.2% contraction, citing ene..
n-tv.de
15. Oktober 2024 um 06:42

Study counts 22,200 insolvencies: More companies are going bankrupt this year than expected - n-tv.de

Economy
Finance
Study counts 22,200 insolvencies: More companies are going bankrupt this year than expected - n-tv.de
The study forecasts 22,200 insolvencies in Germany; economic downturn, export risks, refinancing problems and market consolidation are burdening companies; weak demand, higher wages, due loans and poorer payment morale are exacerbating the situation; the construction industry, retail and services are the most affected; over 1.6 million jobs are at risk; the forecast for 2025 shows further increases in Germany and worldwide; regional differences in development; investments in a green future are..
Frankfurter Rundschau
15. Oktober 2024 um 05:36

Insolvencies at record high: Germany expects more corporate bankruptcies in 2024

Economy
Finance
Insolvencies at record high: Germany expects more corporate bankruptcies in 2024
Insolvencies in Germany are reaching record levels; the forecast for 2024 and 2025 shows a significant increase; impact on employees with income losses; export risks and refinancing difficulties burden companies; first signs of easing expected from 2026 onwards.
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