Hamburg's Economic Struggle: A Record-Breaking Number of Company Collapses in 2023
Hamburg's economic landscape has taken a hit this year, with an influx of businesses succumbing to insolvency. The city, known for its thriving ports and bustling nightlife, has seen a staggering 81 companies per 10,000 file for bankruptcy. This figure is a 27% increase from the previous year's 64 insolvencies. The city is now significantly outpacing the national average of 60 insolvencies per 10,000 companies, as reported by Creditreform.
In adjacent regions like Thuringia, the insolvency rate remains relatively stable at 40 bankruptcies per 10,000 companies. However, in contrast, Bremen ranks at the top with a frightening 120 insolvencies per 10,000 companies. These stark contrasts in economic health exist even as Creditreform anticipates an overall surge in company bankruptcies across Germany in the coming months.
The credit agency remarks that regional industry structures and aging company populations could contribute to these regional disparities. Patrik-Ludwig Hantzsch, the Head of Creditreform Economic Research, says, "More and more companies are crumbling under the relentless pressure of skyrocketing energy prices and the shift in interest rates."
Creditreform and other experts foresee a continued rise in company bankruptcies amidst these "difficult economic conditions." The wave of insolvencies is partly due to the pandemic, as temporary exemptions granted by the government have since expired. As a result, insolvency figures rebounded in 2022 for the first time since the 2009 economic crisis.
Background
Energy crises, soaring material costs, and escalating interest rates have put a squeeze on companies worldwide, including those in Germany. This financial suffocation eventually cracks under the pressure, and companies collapse, leaving a trail of affected employees and debt.
Creditreform, a leading credit reference agency based in Hamburg, closely monitors the economic impact of these challenges across the nation, reporting deteriorating financial health among local businesses. For instance, Creditreform reports that the city of Bremen, undergoing severe pressure, has seen an exponential surge in insolvencies far surpassing the national average.
The transition to alternative energy sources, accelerated by global efforts to combat climate change, has caused energy prices to skyrocket. Simultaneously, surging material costs, combined with the Federal Reserve raising interest rates to curb inflation, heap stress on businesses recently struggling to stay afloat.
Insight
While the specific reasons for Bremen's staggeringly high insolvency rate have not been explicitly documented, we can infer some potential contributing factors based on related information. These factors might include regional economic conditions, investment risks, political and social tensions, and regional economic structures.
- Regional Economic Conditions: Bremen, like other regions in Germany, is affected by broader economic challenges such as rising inflation and post-Covid recovery issues. These factors might amplify financial stress, contributing to higher bankruptcy rates.
- Investment Risks: The Bremen pension fund for dentists, VZB, recorded substantial losses from an investment in the insolvent insurtech start-up Element Insurance. This financial flop could ripple effects that could indirectly contribute to higher bankruptcy rates in the region.
- Political and Social Factors: The Alternative for Germany (AfD) party has grown in popularity in Bremen and other eastern German territories. Tensions related to integration and economic issues may exacerbate underlying social and industry challenges, indirectly impacting business stability.
- Regional Economic Structure: If Bremen’s economy is heavily reliant on an industry experiencing hardship, this could trigger a higher bankruptcy rate in the region.
While these factors offer context, pinpointing the exact reasons for Bremen's high insolvency rate would require in-depth regional economic analysis.
[1] https://www.stern.de
[2] https://de.statista.com/statistik/daten/studie/121123/umfrage/zufriedenheit-mit-dem-wirtschaftlichen-zustand-in-deutschland-nach-regionen/
[3] https://www.handelsblatt.com/unternehmen/was-machen-das-nach-dem-zusammenbruch-der-insurtech-element-insurance-wenn-patienten-und-mlp-die-gelde-ausstehen-lassen/26814700.html
