Corporate insolvencies increase by more than 20% in Germany - forecast: insolvencies to reach pre-coronavirus levels in 2024
Last year, 17,847 companies filed for insolvency in Germany. This represents a 22.4% increase in company insolvencies compared to the same period in the previous year (2022: 14,578 company insolvencies). This is one of the key findings of the analysis of corporate insolvencies in 2023 by information service provider CRIF.
Despite the increase, it is not possible to speak of a "wave of insolvencies" in terms of the nationwide figures, even though double-digit year-on-year growth has been observed consistently since June 2023. From a regional perspective, the number of cases is rising at an alarming rate in some places, for example, in Bremen (up 53.9%) and Schleswig-Holstein (up 34.2%).
In Germany, it is more a case of a return to normality following the implementation of extensive support programs worth billions in recent years. In fact, the current figure is low compared to previous years. The average since 1999 is just under 26,200 company insolvencies per year, with the previous record of 39,320 in 2003.
The forecast for 2024 as a whole is currently 19,800 corporate insolvencies, which corresponds to an increase of 11% compared to 2023. This means that corporate insolvencies next year are expected to almost reach the level of the years before the coronavirus pandemic (2017: 20,276; 2018: 19,552; 2019: 19,005).
"2023 was characterized by many challenges for companies, including high energy costs, supply chain problems, geopolitical uncertainties, higher interest rates and persistent inflation. Consumers' reluctance to spend due to increased costs has also led to a reduction in their disposable income, which in turn has a negative impact on companies. The resulting loss of purchasing power is an additional burden on companies. The financial situation of many companies is also being negatively impacted by increased production costs, higher personnel expenses and high interest rates. All in all, the existence of not just one, but several parallel crises is leading to greater financial instability for companies. The majority of companies are still in a good financial position, although an increasing number of major collapses may lead to further insolvencies. In some cases, a domino effect may result in insolvent companies dragging other companies into insolvency with them," commented CRIF Germany Managing Director, Dr Frank Schlein.
Bremen has the highest insolvency rate
The highest concentration of insolvencies in 2023 was in Bremen with 113 insolvencies per 10,000 companies, with a national average of 59 insolvencies per 10,000 companies. In addition to Bremen, Berlin (100 insolvencies per 10,000 companies), Hamburg (78), North Rhine-Westphalia (76), Saarland (70), Schleswig-Holstein (64) and Hesse (60) also ranked above the average figure. The lowest rates of company insolvencies in 2023 were in Thuringia (38 insolvencies per 10,000 companies), Brandenburg (41), Bavaria (44) and Baden-Württemberg (45).
In absolute terms, the federal states of North Rhine-Westphalia (4,639), Bavaria (2,492) and Baden-Württemberg (1,862) reported the most company insolvencies.
Strongest increase in Bremen and Schleswig-Holstein
In all 16 federal states, the insolvency figures rose compared to the previous year - most strongly in Bremen with an increase of 53.9%. Schleswig-Holstein (up 34.2%), Berlin (up 31.2%), Saarland (up 29.1%) and Mecklenburg-Western Pomerania (up 28.1%) also saw significantly more corporate insolvencies. The increase in company insolvencies was lower than the national average (up 22.4%) in Brandenburg (up 1.1%), Thuringia (up 6.3%) and Saxony-Anhalt (up 10.6%).
Strong growth in insolvencies for healthcare facilities, call centers, catering, fitness studios and private security services
The manufacturing industry was particularly hard hit by insolvencies, with an increase of 29.2%, followed by trade with a rise of 26.2%. An increase of 20.9% was recorded in the construction industry. The service sector recorded an increase of 22.9% compared to the previous year.
A closer look at the various sectors shows that the following industries in particular were affected by insolvencies in terms of percentage growth: healthcare facilities, call centers, catering, fitness studios and private security services. In contrast, shipping, law firms excluding notaries, legal consultancy, and the electricity and energy supply sectors recorded significantly fewer insolvencies compared to the previous year.
