MNI BRIEF: Record German Insolvencies As Debt, Costs Bite
MNI (LONDON) - The number of German firms going bust leaped to its highest level in 20 years last month, research published by the Leibniz Institute for Economic Research Halle (IWH) showed on Thursday, amid a “perfect storm” of sustained economic weakness and high costs.
Some 1,530 companies were declared bankrupt in October, 17% more than in the previous month and nearly 50% more than in October 2023. The figure was also 66% higher than the October average between 2016 and 2019, with a comparable rate last seen in 2004. (See MNI INTERVIEW: German Economy "Stuck," Top Economist Says)
Around 11,000 jobs were lost at the largest 10% of affected companies - fewer than half the previous month's total but 30% above the typical pre-Covid October average. Construction, trade, business services and manufacturing firms were worst affected.
‘Many weaker companies that survived in the low-interest phase and with support during the pandemic are now under massive pressure with sharply increased costs. This is now driving highly indebted companies in particular into insolvency,” IWH’s Steffen Mueller said.