Status: 10/10/2022 1:03 p.m
The fears of a wave of bankruptcies in Germany have been fulfilled: Around a third more companies than in the same month last year filed for bankruptcy in September. Another reason is the high energy costs.
According to calculations by the Halle Institute for Economic Research (IWH), the number of company bankruptcies in Germany increased significantly in September. The number of insolvencies of partnerships and corporations rose by 34 percent compared to the same month last year to 762, according to the IWH insolvency trend published today.
“The number of insolvencies will continue to rise noticeably in the coming months,” said IWH expert Steffen Müller. In addition to the deteriorating economic situation, this is primarily due to the sharp rise in prices for important production factors. In addition to energy costs, wages and interest on loans are also rising.
Insolvencies still decreased in the first half of the year
While the Ukraine war leads to higher energy costs, disruptions in international supply chains make many imported intermediate goods more expensive. The turnaround in interest rates announced by the European Central Bank (ECB) is also increasing companies’ refinancing costs. From October onwards, many companies faced another cost factor: the increase in the minimum wage.
“After a long period of very low insolvency figures, they are expected to return to the level before the corona pandemic in November 2022,” emphasized Müller. The IWH is also expecting around a third more company bankruptcies in October than in October 2021. In November, the previous year’s figures could even be exceeded by 40 percent, predicted the institute, which collects the announcements of the courts’ decisions to open insolvency for its insolvency trend.
For the year as a whole, growth of between 12 and 14 percent is foreseen despite the rapidly rising numbers, since the insolvency figures in the first half of the year were still slightly below the previous year’s level. According to the Federal Statistical Office (Destatis), the German district courts reported 7,113 company bankruptcies in the first half of the year. That was 4.0 percent less than in the first half of 2021.
Industry warns of bankruptcies
Due to the exploding energy costs, however, warnings from politics and business of a wave of bankruptcies had recently increased. In August there were already 25 percent more cases than in the same month last year. According to the industry association BDI, the high prices are a major challenge for 58 percent of the companies, for 34 percent it is a matter of existence. According to the ZDH industry association, the economic situation is also coming to a head in the skilled trades. “In the trades, a wave of insolvencies is rolling towards us because of the energy crisis,” said ZDH President Hans Peter Wollseifer.
According to the IWH, the gross domestic product will fall by 1.4 percent in the coming year, after growing by 1.1 percent this year. “The German economy is facing a recession,” summarized the IWH its recently published autumn forecast. “The reason is the enormous increase in the price of fossil fuels.”
Other institutes had also recently announced an economic downturn. For example, the Munich ifo Institute drastically cut its economic forecast for this year and next. In the coming year, the institute expects economic output to shrink by 0.3 percent, for this year only 1.6 percent growth. “We are going into a winter recession,” said Timo Wollmershäuser, head of ifo economic forecasts.