Business Struggles and Bankruptcies on the Rise
These challenging times have led to an increase in company bankruptcies. The economic downturn, higher interest rates, and escalating energy costs are contributing factors, as estimated by the credit agency Creditreform. This year, the agency predicts that a staggering 18,100 companies will file for bankruptcy by the year's end, marking a 23.5% increase compared to the previous year. The Head of Creditreform Economic Research, Patrik-Ludwig Hantzsch, explained, "More and more companies are succumbing to the constant strain of high energy prices and the interest rate shift."
Experts forecast that the number of company bankruptcies will continue to climb in the coming months, reflecting the harsh economic climate. Creditreform's calculations reveal that normally, the number of insolvencies would have almost leveled off. However, the coronavirus pandemic-induced temporary exemptions helped avert a wave of bankruptcies. Unfortunately, insolvency figures have skyrocketed again in 2022 for the first time since the 2009 economic crisis.
Concurrently, though consumer bankruptcies did not significantly increase last year, some experts anticipate a surge in the near future. The weak economic outlook and the deteriorating over-indebtedness situation in many people have raised concerns. Surprisingly, even in the face of this situation, the labor market remains robust.
Background Insights:
The global economic crisis and its aftermath have taken a heavy toll on various industries, resulting in a surge in company bankruptcies. Austrian businesses have been grappling with high inflation, recession, and the end of pandemic-related support. Moreover, economic challenges, rising inflation and energy costs, the poor global economic situation, and even cryptocurrency-based financial fraud have significantly impacted the Austrian business sector.
As company bankruptcies surge, the labor market suffers, leading to rising unemployment and making it harder for individuals to maintain financial stability. Reduced consumer spending, based on economic uncertainty and the decline in consumer confidence, also increases the likelihood of consumer bankruptcies.
It's crucial to keep track of these developments and heed the valuable insights provided by credit reference agencies like Creditreform. Their data can aid businesses and policymakers in navigating the challenging economic landscape and making informed decisions.
