Wave of bankruptcies in Germany: record numbers alarm economic experts!

Wave of bankruptcies in Germany: record numbers alarm economic experts!

The economic situation in Germany is in a worrying state. The Federal Statistical Office has stopped publishing preliminary insolvency figures, and the reason for this is surprising: the statistics lack “methodological maturity”. These developments highlight the alarming insolvency figures that currently have Germany firmly in its grip. Loud Focus In December 2023, the number of bankruptcies rose to an alarming level with 1,519 filings - that's 49 bankruptcies per day and an increase of 75% compared to the average December figures from 2016 to 2019.

These dramatic changes are by no means isolated. The Leibniz Institute for Economic Research in Halle provides preliminary insolvency statistics every month, although federal statisticians now only publish final figures with a delay of around six months. This delay could have a negative impact on public discourse about the economic situation, as bankruptcies are seen as indicators of economic problems such as rising interest rates, energy costs and a slowdown in consumption.

Causes of the crisis

Steffen Müller, head of IWH insolvency research, explains that the high number of insolvencies can no longer be explained by catch-up effects from the pandemic or the low interest rate policy. Low interest rates and government aid had suppressed bankruptcies for years. But with the rise in interest rates and the elimination of subsidies from 2022, economic conditions have changed. The catch-up effects that kept the number of bankruptcies low for some time are losing steam and thus reflect the current challenges in the German economy. Loud IWH However, insolvencies are a normal part of the market economy because they lead to necessary market adjustments and at the same time create space for sustainable companies.

The coordination of insolvency statistics therefore remains a critical challenge. It remains questionable whether other economic key figures could no longer be published in the future, which would create further uncertainty. While the situation is serious, the market shake-up could also present opportunities.

Conclusion

At a time when the economy is constantly in upheaval, the question remains: Where is the journey going? The increasing number of insolvencies is a clear indicator of the difficulties that many companies have to overcome. It is up to the decision makers to have a good hand and find new ways of support and stability. Current developments challenge us all to look at reality.