Economic Struggles in 2023: More Companies Facing Insolvency in Northern Regions
The energy crisis and skyrocketing material costs, coupled with higher interest rates, have forced a considerable number of companies in the northern regions to file for bankruptcy this year. In fact, Creditreform predicts that Schleswig-Holstein will see 64 insolvencies per 10,000 companies by the end of 2023, marking a substantial increase compared to the 48 recorded in 2022. The overall national insolvency rate, however, stands at 60, up from 48 in the previous year (Creditreform data).
The credit agency did not offer an exhaustive explanation for the disparities in bankruptcy rates between the northern and southern regions. Instead, they suggested that regional industry structures and company age distributions might contribute to these variations. Regrettably, Creditreform did not provide regional data related to employee numbers affected or payment default levels.
As economic pressures intensify, it appears that an escalating number of companies nationwide are succumbing to the relentless stress of soaring energy costs and interest rate surges. "More companies are crumbling under the constant pressure of escalating energy prices and interest rate shifts," emphasized Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research.
Other experts share Creditreform's conclusion that the insolvency rate will continue to climb amidst these unprecedented economic challenges. In Hantzsch's opinion, the wave of bankruptcies spurred by the pandemic has mostly subsided, and there's a likelihood of further insolvency cases in the next few months.
Additionally, Creditreform expects creditor organizations to rely increasingly on credit agencies like Creditreform Bremen or Creditreform Schleswig-Holstein to evaluate potential business partners' creditworthiness as a consequence of the energy crisis and subsequent insolvency surge.
Creditreform website
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- Despite the difficult economic situation in Thuringia, companies manage to navigate the challenges, maintaining an insolvency rate of 40 per 10,000 companies.
- In the northern city of Bremen, an alarming insolvency rate of 120 bankruptcies per 10,000 companies has resulted from the energy crisis and rising material costs.
- Hantzsch pointed out that the constant pressure caused by high energy prices and interest rate hikes is causing companies to collapse in greater numbers.
- Compared to the north, Frankfurt's companies might be better equipped to deal with financial difficulties, as their insolvency rate increased by only 12% compared to the previous year, according to the Creditreform data.
- In response to the energy crisis and resulting insolvency wave, Creditreform predicts that creditor institutions will rely more heavily on credit agencies like themselves to gauge potential partners' creditworthiness.
