Bars hanging on the shop window of an empty store. Bankruptcies surged in Germany in July, with the number of registered insolvencies rising higher year on year than in any previous month since October 2024. Uwe Anspach/dpa
Bankruptcies surged in Germany in July, with the number of registered insolvencies rising higher year on year than in any previous month since October 2024.
Preliminary figures from the Federal Statistical Office showed 19.2% more insolvencies were recorded by local courts than in July 2024, suggesting that Chancellor Friedrich Merz’s efforts to revive Europe’s largest economy are yet to make an impact on private businesses.
While May saw the first decline in bankruptcy figures since March 2023, the figure rose again in June.
“The economic crisis continues – and that’s why the wave of corporate insolvencies continues to grow,” said Jupp Zenzen, economic expert at the German Chamber of Commerce and Industry (DIHK).
After two years of recession, the liquidity of many companies has taken a hit, with high energy prices and excessive bureaucracy proving a significant burden.
The economy needs “relief across the board,” warned Zenzen, calling on politicians to implement “urgently needed reforms very quickly.”
According to Germany’s VID professional association of insolvency administrators, however, the rise in bankruptcies could also be due to companies reacting too late to structural changes in their industries.
“People are too quick to look for the cause of business failures in rising customs duties or high energy costs,” said VID Chairman Christoph Niering. “This is a dangerous misjudgement, as it means that restructuring measures are tackled too late or not comprehensively enough.”
IWH sees insolvency figures picking up
The latest monthly analysis by the Halle Institute for Economic Research (IWH) also showed insolvency figures are picking up again.
The IWH counted 1,588 insolvencies of partnerships and corporations in Germany in July – 13% more than in July 2024 and 64% more than in an average July from 2016 to 2019, before the coronavirus pandemic.
However, comparatively few jobs were affected by the bankruptcies, many of which were of small firms.
Various credit agencies are expecting more company bankruptcies for the year as a whole than in 2024. According to official figures, last year saw 21,812 cases of insolvency, the highest since 2015. The increase was expected after government support from the coronavirus pandemic came to an end.
Final insolvency figures from May released
The Federal Statistical Office has also released final data on insolvencies in May, with local courts reporting 2,036 such instances, up 5.3% from the previous year.
For every 10,000 companies, there were 5.9 bankruptcies in Germany in May.