Increase in corporate insolvencies in Bavaria: Financial experts are observing a deteriorating economy and are warning of a further increase

Increase in corporate insolvencies in Bavaria: Financial experts are observing a deteriorating economy and are warning of a further increase

According to a report by www.zeit.de, the number of corporate insolvencies in Bavaria has been rising again for a year and is almost at the level before the corona pandemic. Larger companies are increasingly becoming insolvent, which affects more employees. The deteriorating economy is putting additional pressure on companies and can lead to a further increase in bankruptcies.

According to an evaluation by the Leibniz Institute for Economic Research Halle (IWH), 136 companies filed for bankruptcy with the courts in Bavaria in July, and a total of 872 have filed since January. The number of insolvencies is once again approaching the long-term trend. High energy, raw material and labor costs as well as increasing bureaucracy and growing environmental regulations are affecting more and more companies. Nationwide, the number of insolvencies of partnerships and corporations in Germany was 1,025 in July, 6 percent above the average value for the month of July in the years 2016 to 2019.

This development has various effects on the market and the financial industry. An increase in bankruptcies means several things: Firstly, many jobs are at risk, which can lead to rising unemployment. This, in turn, can reduce people's purchasing power and have a negative impact on consumption and ultimately the economy. In addition, an increased number of companies leaving the market can lead to a reduction in competition and an increase in the market power of the remaining companies.

Politics and business must work together to take appropriate measures to stabilize the situation and improve the long-term framework conditions for companies. This could include, for example, reducing labor and raw material costs as well as reducing bureaucracy and environmental regulations. This is the only way to counteract creeping de-industrialization.