Insolvency tsunami feared: number of company bankruptcies is increasing dramatically - financial experts warn of effects on the economy

Insolvency tsunami feared: number of company bankruptcies is increasing dramatically - financial experts warn of effects on the economy

According to a report by www.n-tv.de,

The number of company bankruptcies in Germany rose significantly again in 2023, and experts expect this trend to continue in 2024. The construction, retail and real estate sectors are particularly affected. The bankruptcies also have an impact on jobs, and it is estimated that around 205,000 jobs have been threatened or lost due to corporate bankruptcies this year.

Creditreform data shows that bankruptcies are increasing across all sectors, with over 80 percent of affected companies being small firms with ten or fewer employees. In addition, the number of bankruptcies among larger companies with annual sales of more than ten million euros is also increasing, which is due to the difficult economic conditions.

It is expected that the number of company bankruptcies could rise to up to 20,000 cases in 2024. Although this increase is worrying, experts see this more as a normalization of insolvency rates after the expiry of state aid. Nevertheless, the increasing number of major bankruptcies could lead to further bankruptcies, as insolvent companies could later drag other companies into insolvency.

However, there is a positive development in consumer bankruptcies, which have not yet increased due to the robust situation on the labor market. However, it is also expected that the numbers could rise given the weak economic outlook.

Overall, the development of company bankruptcies is worrying and could cause further uncertainty in the financial markets. It is important to keep a close eye on the situation and take appropriate measures to mitigate the impact on the economy.