The number of company bankruptcies has now increased again after a brief period of relaxation in the spring. One of the reasons: the corona pandemic.
According to the Leibniz Institute for Economic Research Halle (IWH), the number of company bankruptcies has risen to a record high. In the third quarter of 2024, the number of bankruptcies was higher than in any other quarter since 2010. In addition to the current weak phase of the German economy, catch-up effects from the corona pandemic also played a role, said the head of IWH insolvency research, Steffen Müller. At that time, the number of bankruptcies was kept artificially low by government support programs. Many of the companies supported at the time were now in trouble.
In the third quarter of 2024, 3,991 insolvencies of partnerships and corporations were recorded, a record high in the past 14 years. The last time the figure was higher was in the second quarter of 2010 with 4,071 bankruptcies. At that time, the financial and economic crisis of 2008/2009 was still having an impact, according to a statement from the IWH.
On Wednesday, the federal government lowered its economic forecast. It expects economic output to decline by 0.2 percent this year. Federal Economics Minister Robert Habeck (Greens) emphasized that the economy would grow faster again if the measures of the growth initiative were implemented decisively and by everyone. The federal government is relying on its growth package with tax relief, work incentives and electricity price reductions. However, leading economic institutes have recently expressed skepticism as to whether the package can provide the necessary stimulus.
Since June last year, the number of monthly insolvencies has been significantly higher than the average for the pre-Corona years 2016 to 2019. In September, the IWH recorded 1,303 insolvencies, which was 44 percent above the September average before the pandemic. However, the numbers are still far from previous highs. According to the IWH, there were sometimes 2,000 company bankruptcies per month in 2003 and 2010.
Nevertheless, the Federal Republic is currently not experiencing a severe recession, said Lars Feld, economics professor and advisor to Finance Minister Christian Lindner (FDP) on RTL/ntv. “The substance of the German economy is still very good.” Companies are very innovative in different areas. In addition, the financial situation is better than in earlier times, when Germany was the sick man of Europe.
Compared to the third quarter of 2023, the increase in insolvencies was greatest in the large federal states of Bavaria (+56 percent) and Baden-Württemberg (+42 percent). In terms of sectors, the increase in the large area of business-related services was high at 31 percent. Smaller sectors, such as real estate or housing, recorded an even larger increase of 69 percent.
For its study, the institute evaluates the current insolvency announcements from the German registry courts.