Crisis Ahead: Increased Company Insolvencies Across Germany and Consequences for Europe and Beyond
Escalating Customs Dispute Triggers Economic Turmoil: Increased Bankruptcy Predictions - Escalating customs dispute driving increase in business insolvencies amidst economic struggles
Amidst a swirling economic crisis and ongoing trade dispute, credit insurer Allianz Trade predicts a grim future for Germany's corporate sector. The wave of company insolvencies, including a surge of large-scale collapses with devastating impacts, is set to continue and worsen, with the number of insolvencies projected to increase by approximately 11% in 2025, reaching around 24,400 cases, as stated in a recent study.
Previously, Allianz Trade had predicted a 10% increase. In 2026, a further increase of 3% is expected, reaching a staggering 25,050 cases.
A chilling forecast indeed, as Germany battles a grim economic climate, volatile global trade, and myriad uncertainties resulting from the trade conflict. Milo Bogaerts, CEO of Allianz Trade in Germany, Austria, and Switzerland, warns of many large insolvencies and significant damages in 2025, explaining how these cash-flow shortages could create domino effects along fragile supply chains.
The past year has already witnessed dismal records for large insolvencies, with 87 large companies collapsing and a collective turnover of 17.4 billion euros. The forthcoming year shows no relief.
Trouble looms in various sectors, as struggling companies such as textile manufacturers, healthcare providers, and automotive suppliers, among others, continue to fall prey to the economic downturn. The first quarter of 2025 has already seen 16 large companies falter – from clinics and large retail chains to automotive suppliers and chemical plants. Iconic fashion manufacturers, like Gerry Weber, have been forced into bankruptcy, with the sad consequence of the closure of all stores.
The disintegration of businesses in Germany does not merely impact the national economy but spills over to neighboring markets, most notably France and the USA.
The trade disputes fuelled by former U.S. President Trump's policies have played a part in Germany's economic hardships. This ripple effect could indirectly impact U.S. businesses with close ties to German companies. Moreover, global economic instability emanating from Germany could have far-reaching consequences, potentially affecting industries that rely on German imports or have substantial ties to the country.
France, as a fellow member of the EU, is closely tied to Germany economically. Consequently, the downturn in the neighboring country could have a ripple effect on the French economy. Industries with significant investments or supply chains in Germany may soon find themselves in turmoil. In addition, increased competition might arise as companies from Germany relocate to France, seeking to avoid economic hardships at home.
To recap, it's not all doom and gloom for Germany, but there's certainly trouble on the horizon. As companies collapse in droves, the economic repercussions will echo far and wide, testing the resilience of not only Germany and France but also the global economy. Stay vigilant.
In light of the projected increase in company insolvencies and the domino effects along fragile supply chains, vocational training programs could play an essential role in helping unemployed workers find new opportunities, such as those in the sports industry, providing a means to adapt and recover from the economic crisis. Simultaneously, community policymakers should consider offering sport-related vocational training in schools and adult education centers as part of their crisis response strategies.
