The Persistent Surge in Company Insolvencies Amidst Economic Woes - A Hard Hit Industry
Persistent Increase in Business Bankruptcies Observed in March - Sector Experiencing Significant Struggles - Enterprises facing insolvency during March reported figures
You know the drill. The German economy has been taking a beating, and it shows in the increasing number of company insolvencies. Expert Steffen Müller from the Institute for Economic Research Halle ain't mincing words - the high number of these shutdowns isn't solely due to current macroeconomic quagmires.
He's quick to point out that it's not just about the present economic struggles. For years, insanely low interest rates have been keeping insolvencies at bay, and during the pandemic, it was just a matter of pushing back insolvencies of weaker companies because of support measures.
Now, with interest rates climbing and the winding down of support measures, we're seeing the 'catch-up effects' in insolvencies since 2022. Remember, insolvencies might be a bummer, but they're crucial market corrections, paving the way for more future-oriented businesses to thrive.
So, what's the score? In the first quarter of this year, a whopping 4,237 sole proprietorships and corporations tasted the bitter pill of insolvency. That's more than in the last quarter of 2024, when insolvency numbers hit an all-time high since the end of the financial crisis in 2009.
Steffen's team says the number of affected jobs in the largest 10% of insolvent companies skyrocketed by about one-sixth to nearly 49,000 in the three months. They even hit record highs in key sectors like industry, construction, retail, and other services.
They got their data by analyzing current insolvency announcements from German registry courts and linking them to balance sheet figures of the affected companies. It doesn't stop there, though - the number of company insolvencies in March was a whopping 12% higher than in March 2024. Look, more than 16,000 jobs were on the line in the largest 10 insolvent companies last month. Shutting down big fish employers can lead to mass income and wage losses for the employees that got hit.
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- Company Insolvency
- Industry Crisis
- Germany's Struggling Economy
- The continuing rise in company insolvencies in Germany's struggling economy is not solely due to current economic issues, as expert Steffen Müller suggests that low interest rates in previous years and pandemic support measures also played significant roles.
- The increase in insolvencies among proprietorships and corporations is becoming evident, with over 4,237 companies experiencing insolvency in the first quarter of the current year – a number higher than in the last quarter of 2024, which recorded the highest number of insolvencies since the end of the financial crisis in 2009.
- Steffen's team has found that the number of affected jobs in the largest 10% of insolvent companies has risen significantly, with nearly 49,000 jobs impacted in the three months they studied – a figure reflecting record highs in key sectors like industry, construction, retail, and other services.
