Title: Soaring Insolvencies across Germany in 2023, Especially in Saxony
The ongoing energy crisis, skyrocketing material costs, and significantly increased interest rates are pushing an alarming number of businesses towards bankruptcy, even in prosperous regions like Saxony. According to Creditreform's estimates, the insolvency rate, which represents the number of bankruptcies per 10,000 companies, is predicted to reach 57 in 2023, compared to 45 in 2022.
While Bremen tops the list with an estimated 120 bankruptcies per 10,000 companies, followed by Berlin (103), Hamburg (81), North Rhine-Westphalia (77), Saarland (67), and Schleswig-Holstein (64), the lowest rate is recorded in Thuringia with a mere 40. Regions like these are experiencing an undeniable surge in company bankruptcies due to the energy crisis and higher interest rates.
Creditreform cites regional industry structures and varying company age demographics as partial reasons for the discrepancies in insolvency rates between regions. The organization did not offer specifics on why these trends persist in certain regions.
The energy crunch and interest rate surge have crippled multiple businesses, resulting in an estimated 18,100 prospective insolvencies by year's end. This would represent a 23.5% increase compared to 2022 and hearkens back to the high rate of 18,830 cases seen in 2019. The overall insolvency rate for Germany stands at 60 respectively, up from the previous year's 48.
All sectors seem to be bracing for this tide of corporate dissolution. Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research, elaborates on the decision-making of struggling companies: "More and more businesses crumble under the constant weight of sky-high energy prices and rapid interest rate transformations."
Experts like Hantzsch forecast a continuous rise in company bankruptcies in the face of these challenging economic conditions. They predict an even greater number of cases as the situation remains rocky in the months ahead.
Insightful Considerations
The sources do not supply extensive information about the forces causing a sharp increase in company bankruptcies in Saxony. However, several factors may be contributing to this unfortunate scenario:
- Struggling Economy: The ailing economy, particularly impacting sectors like construction and manufacturing, is a substantial influence. Rising interest rates, combined with diminished valuations, have led to a surge in developer defaults. This, in turn, has elevated non-performing commercial real estate (CRE) loans, amounting to €9.7 billion by 2024, a 56% hike year-over-year[5].
- Supply Chain Disruptions: Potential supply chain bottlenecks, trade protectionism, or geopolitical conflicts could amplify corporate difficulties, as indicated by the Weil European Distress Index[5].
- Regional Challenges: Places such as Saxony, an ex-East German territory, are grappling with unique socio-economic and digitalization integration hurdles post-reunification. These factors, when paired with broader economic instability, could be fueling higher insolvency numbers in the region[3].
A Comparison of Regions
- Bremen: In 2022, Bremen reported 188 private insolvencies per 100,000 inhabitants, which is a particular figure but not directly equivalent to corporate insolvencies[2].
- Germany as a Whole: National trends have clearly shown an escalation in insolvencies, particularly in the construction and manufacturing sectors. This alludes to a broader economic predicament confronting multiple regions in Germany[5].
Specific Data for Saxony
Although no clear data has been released for the insolvency rates in Saxony in 2023, the broader economic context and local challenges suggest that Saxony, like other regions, is grappling with rising financial pressures.
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