Germany is experiencing an economic downturn, and the consequences are clear. In 2024, the number of companies filing for bankruptcy increased by 16.8% compared to the previous year. This alarming trend comes from a report by the Federal Statistical Office released on Friday.
The year’s final month saw a 13.8% rise in insolvency filings compared to December 2023. It’s important to note that these figures reflect cases where a court has already made a first decision on bankruptcy. Typically, companies file for bankruptcy about three months before that ruling.
October showed particularly stark numbers. Local courts recorded 2,012 corporate bankruptcy filings, marking a significant 35.9% increase from the same month last year. Creditors’ claims reached around €3.8 billion ($3.9 billion), more than double the €1.6 billion reported the year prior.
Volker Treier, chief analyst from the German Chamber of Commerce and Industry (DIHK), described this rise as “a clear warning signal” about the state of the economy. He noted that corporate insolvencies reached their highest level in October of a decade.
According to the Federal Statistical Office, October reported 5.9 corporate insolvencies for every 10,000 companies. The transport, storage, construction, and hospitality sectors accounted for most of these bankruptcies. Consumer bankruptcies also surged, rising by 10.8% to 6,237 cases in October compared to the same month in 2023.
Creditreform, a credit reference agency, predicts that Germany will see 22,400 corporate bankruptcies by the end of 2024, the highest number since 2015. However, they caution that filings in 2025 could approach the peak of 32,000 reached during the 2009 financial crisis.
Several challenges contribute to this bleak outlook. High energy costs, government bureaucracy, political uncertainty, and consumers’ reluctance to spend all weigh heavily on businesses.
Additionally, emergency measures enacted during the coronavirus pandemic to prevent widespread bankruptcies have expired, further complicating matters for struggling companies.