Trend is up
Increase in company bankruptcies recorded
01/11/2023, 10:55 am
The good news: the feared wave of bankruptcies did not materialize. Nevertheless, the Federal Statistical Office registered more company insolvencies at the end of 2022 than in the previous year. According to a study, however, there is no reason to worry: the level is “comparatively low”.
The rise in company bankruptcies in Germany accelerated in December. The number of standard insolvencies applied for increased by 3.1 percent compared to the previous month, as reported by the Federal Statistical Office. There was also an increase in November, but it was significantly lower at 1.2 percent. The insolvency applications are usually included in the official statistics with a delay of several months, as the Federal Office emphasized. This shows a total of 1,245 corporate insolvencies for October 2022, 17.9 percent more than a year earlier.
According to a study, the number of insolvencies rose to an annual high at the end of 2022, but the feared wave of bankruptcies did not materialize. According to the Halle Institute for Economic Research (IWH), 879 partnerships and corporations filed for bankruptcy in December. That was 23 percent more than a year earlier.
Nevertheless, the most recent insolvency figures are below the long-term average. Almost 9,000 jobs were affected in the ten percent of the largest companies whose bankruptcy was reported last month. “Both the number of insolvent partnerships and corporations and the jobs affected in these companies were at a comparatively low level in 2022,” said IWH expert Steffen Müller.
Due to delivery bottlenecks, high energy prices and other problems, 28 percent of the jobs affected by insolvency last year were in industry – significantly more than in previous years. The IWH expects a similar number of insolvencies in the coming months as in December. “In the spring, the numbers could increase further due to seasonal factors,” said Müller. “Despite the expected increase, the number of insolvencies will probably not rise above the long-term average until spring 2023.”
The German economy is facing a recession due to the sharp rise in energy costs as a result of the Russian war against Ukraine. The IWH assumes that economic output will stagnate over the year as a whole.