Record-Breaking Insolvencies: 20-Year High in Germany
Peak number of corporate bankruptcies in two decades reported - Record-breaking number of businesses filing for bankruptcy in the past two decades
Hey there, folks! Here's the skinny on Germany's insolvency situation:
The Leibniz Institute for Economic Research Halle (IWH) has reported a whopping 1,626 insolvencies of individuals and capital companies in April, making it the highest level in 20 years! Compared to the previous month, the figure is up 11%, and when compared to a year ago, it's a staggering 21% increase. Believe it or not, these numbers even exceed the values from the financial crisis of 2008/2009.
However, don't freak out just yet. Steffen Müller, head of IWH insolvency research, suggests that the unusually high proportion of small insolvency proceedings could return to the long-term average, potentially resulting in a decrease in insolvencies in the coming months. But here's the catch: we're still expecting to see more company insolvencies in Germany in the near future than we did the previous year.
Now, what causes such disheartening numbers, you ask? Well, apart from the usual suspects like economic uncertainties and global market fluctuations, there are a few culprits that made 2021 particularly tough for businesses:
- Economic repercussions of the COVID-19 pandemic
- surging costs and inflation
- policy decisions and interest rates that may have led to increased debt burdens
- unstable global economic conditions affecting exports and economic stability
While specific data for 2021 might be scarce, these factors undoubtedly created a challenging business environment that likely contributed to the rise in insolvencies. So, keep your chins up, and let's hope for a brighter economic future!
Oh, and just to clear things up, we're talking about insolvency, not bankruptcy - although both terms are often used interchangeably, they have slightly different meanings. An insolvent individual or company can't pay its debts as they become due, whereas bankruptcy is a legal declaration of insolvency. There ya go!
- Insolvency
- Germany
- Company bankruptcy
- Institute for Economic Research Halle
The record-breaking insolvency rate in Germany, as reported by the Leibniz Institute for Economic Research Halle (IWH), has surged by 21% compared to last year, reaching a 20-year high with 1,626 insolvencies in April. This increase exceeds the insolvency levels during the financial crisis of 2008/2009. However, Steffen Müller, head of IWH insolvency research, predicts that the unusual rise in small insolvency proceedings might decrease in the coming months. Despite this assessment, more company insolvencies are expected in Germany in the near future compared to the previous year.
Factors contributing to this challenging business environment in 2021 include economic repercussions of the COVID-19 pandemic, surging costs and inflation, policy decisions and interest rates that may have led to increased debt burdens, and unstable global economic conditions affecting exports and economic stability.
It's important to note that insolvency and company bankruptcy are not the same, though often used interchangeably. Insolvency refers to a situation where an individual or company can't pay its debts as they become due, whereas bankruptcy is a legal declaration of insolvency.
