According to a study, the number of major bankruptcies in Germany increased significantly in the first nine months of this year. The construction industry is currently the hardest hit by bankruptcies.
According to a study by the credit insurer Allianz Trade, there are more and more large bankruptcies in the German economy. “The major bankruptcies have returned this year and are heading towards the highest level from 2020,” says Allianz Trade insolvency expert Maxime Lemerle. Allianz Trade defines major insolvencies as bankruptcies of companies with an annual turnover of at least 50 million euros.
According to the study, the number of major bankruptcies in Germany is heading towards the record level of 2020, with 45 cases in the first nine months of 2023. For comparison: In the same period in 2022, there were a good third less with 26 major bankruptcies and 2021 There were only 17 such bankruptcies.
“2020 marked the highest level of insolvencies since 2016 with 58 major insolvencies in the year as a whole and 44 cases in the comparable period in the first few months,” explains Lemerle.
Location of clinics is bad
According to Allianz Trade, there have been a particularly large number of major bankruptcies in (fashion) retail, hospitals and mechanical engineering this year. A total of twelve large textile companies and fashion retailers will have slipped into insolvency by September 2023, as will six clinics, according to the study.
“This fits with the situation report from the German Hospital Institute (DKI), as two thirds of German hospitals currently describe their financial situation as bad or very bad, and this is even higher for medium-sized hospitals,” write the insolvency experts at Allianz Trade. There were also some major bankruptcies in mechanical engineering with five cases as well as in the metal (four) and construction industries (three).
The construction industry is suffering the most
According to the study, the most cases of insolvency across all company sizes have so far been recorded in the construction industry, followed by retail and companies in the service sector. “The retail sector recorded the strongest increase in the number of cases compared to the same period last year, but the hospitality industry was also showing weakness even before the VAT increase.”
Allianz Trade boss for the German-speaking region, Milo Bogaerts, is also predicting a difficult time for retailers for the upcoming Christmas business. “This year, significantly fewer gifts are likely to end up under the Christmas tree,” says Bogaerts: “Food prices are still high despite the lower inflation rate. Consumers are therefore saving on all other expenses: they are going out less, buying less clothing – and Christmas presents.”
“The risk of payment defaults is increasing not only in Germany, but also in three of the most important German export markets: the Netherlands, the USA and France. German companies should therefore be doubly vigilant about impending snowball effects and pay attention to warning signals among their customers.”
Heidi Radvilas, ARD financial editorial team, tagesschau, November 27th, 2023 11:00 a.m