Sharp rise in German bankruptcies as life support schemes end
More than 8,000 businesses in Germany have gone bust this year, according to recent data released by the Federal Statistical Office.
In August of this year, the number of regular insolvency proceedings filed increased by 13.8 percent compared to the same month the previous year. This follows a 23.8 percent increase reported in July 2023.
The Wiesbaden-based agency said it was important to note that proceedings are included in official statistics only after the initial decision by the insolvency court, which often comes three months after the insolvency application date.
Finalised figures for the first half of 2023 also revealed a notable increase in corporate insolvencies. Local courts across Germany reported a total in this period of 8,571 insolvencies, representing a 20.5 percent increase compared to the previous year. Creditors' claims were estimated at around €13.9 billion, a significant increase from the approximately €8.2 billion reported during the first half of 2022.
This upward trend in corporate bankruptcies marks a shift from previous years when government assistance and temporarily suspended insolvency filing requirements mitigated bankruptcies during economic crises, such as the Covid-19 and energy crises.
Experts had anticipated an increase in corporate insolvencies as these protective measures were phased out, reflecting current economic conditions.
The European Commission sharply cut its 2023 growth forecast for Germany on Monday, predicting the EU's biggest economy will be in recession this year.
The commission, the EU's executive arm, predicted the German economy would contract by 0.4 percent in 2023, compared to a previous forecast of 0.2 percent growth.
Germany faces recession in its vast industrial sector and a lacklustre performance in exports, both of which have significant impacts for the whole of the economy.
READ ALSO: EU forecasts German economy in recession in 2023
AFP contributed reporting
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In August of this year, the number of regular insolvency proceedings filed increased by 13.8 percent compared to the same month the previous year. This follows a 23.8 percent increase reported in July 2023.
The Wiesbaden-based agency said it was important to note that proceedings are included in official statistics only after the initial decision by the insolvency court, which often comes three months after the insolvency application date.
Finalised figures for the first half of 2023 also revealed a notable increase in corporate insolvencies. Local courts across Germany reported a total in this period of 8,571 insolvencies, representing a 20.5 percent increase compared to the previous year. Creditors' claims were estimated at around €13.9 billion, a significant increase from the approximately €8.2 billion reported during the first half of 2022.
This upward trend in corporate bankruptcies marks a shift from previous years when government assistance and temporarily suspended insolvency filing requirements mitigated bankruptcies during economic crises, such as the Covid-19 and energy crises.
Experts had anticipated an increase in corporate insolvencies as these protective measures were phased out, reflecting current economic conditions.
The European Commission sharply cut its 2023 growth forecast for Germany on Monday, predicting the EU's biggest economy will be in recession this year.
The commission, the EU's executive arm, predicted the German economy would contract by 0.4 percent in 2023, compared to a previous forecast of 0.2 percent growth.
Germany faces recession in its vast industrial sector and a lacklustre performance in exports, both of which have significant impacts for the whole of the economy.
READ ALSO: EU forecasts German economy in recession in 2023
AFP contributed reporting
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