German Economy: Record Company Bankruptcies in 2024
The number of company bankruptcies in Germany has surged to record levels, with one sector particularly affected. A study by the Halle Institute for Economic Research (IWH) revealed that 1,406 bankruptcies of partnerships and corporations were registered in July, marking a 20% increase from the previous month and a staggering 37% rise from the previous year. This current value is also 46% above the average for the years 2016 to 2019.
The study emphasized that the significant increase in insolvencies affects all sectors, with manufacturing being particularly hard-hit. After witnessing 100 insolvent industrial companies in June, the number has now climbed to 145, marking a new high since industry data was first recorded in January 2020.
The IWH report also revealed that the states of Berlin, Hesse, and North Rhine-Westphalia were disproportionately affected by the surge in bankruptcies.
The study estimated that approximately 10,000 jobs are at risk in the largest ten percent of companies experiencing insolvency in July. Such closures would lead to significant and lasting income and wage losses for affected employees.
Experts suggest that the current economic climate, characterized by a permanent slump and anemic recovery, is contributing to the rise in bankruptcies. While large companies may attempt to restructure themselves, such efforts often fail in times of crisis, leading to an increase in high-profile bankruptcies.
While some experts anticipate a slight decline in insolvencies in August, they predict a resurgence in September, suggesting that the number of bankruptcies is likely to remain consistently above pre-pandemic levels.