German bankruptcies sharply increase as life support schemes end

According to recent data made available by the Federal Statistical Office, more than 8,000 enterprises in Germany have failed this year. Compared to the same month last year, there were 13.8 per cent more regular insolvency proceedings filed in August of this year. This comes after a reported 23.8% growth in July 2023. In this article, you will get to know about German bankruptcies sharply increasing as life support schemes end.

The Wiesbaden-based organization

• • Official statistics only include proceedings following the insolvency court’s initial decision, often three months after the application.
  • In the first half of 2023, there was a notable increase in corporate insolvencies in Germany.
  • Local courts reported a total of 8,571 insolvencies during this period, marking a 20.5% increase compared to the previous year.
  • Creditor claims amounted to approximately €13.9 billion, a significant surge from the roughly €8.2 billion reported in the first half of 2022.

Company bankruptcies

• • Unlike previous years, government aid and delayed insolvency filing requirements mitigated bankruptcies during crises like COVID-19 and energy crises.
  • The current trend of increased business bankruptcies signals a departure from this pattern.
  • Experts had anticipated a rise in business insolvencies as these protective measures were gradually lifted.
  • This shift is attributed to the changing economic conditions and the removal of crisis-related safeguards.

Growth projection for Germany till 2023

• • The European Commission revised its growth projection for Germany in 2023.
  • The EU’s largest economy is expected to enter a recession this year.
  • The commission’s earlier prediction of 0.2 per cent growth was revised to a 0.4 per cent contraction for the German economy in 2023.
  • Germany is facing a recession primarily in its significant manufacturing sector.
  • Dismal export performance is also contributing to the economic challenges faced by the country.