Germany sees 41% surge in company insolvencies in H1 ’24

Germany saw a 41 per cent increase in insolvencies among medium-sized and large companies in the first half of 2024, compared to the same period last year, according to the Handelsblatt daily.

Citing inflation, rising costs, and weakening demand, Handelsblatt reported that 162 companies with a turnover exceeding 10 million euros ($10.83 million) filed for insolvency.

This surge surpassed the 30 per cent increase anticipated by restructuring analysts earlier in the year.

Particularly affected sectors include real estate, automotive suppliers, and mechanical engineering. The wave of insolvencies is attributed to the pandemic’s after-effects: inflation, increasing energy and material costs, and weakening demand.

Additionally, global crises, poor economic prospects, and high interest rates are making restructuring and investments in struggling firms less attractive.

Germany’s DIHK Chambers of Industry and Commerce warned in May that insolvencies are likely to continue rising due to ongoing structural issues like a shortage of skilled labour.

In 2023, company insolvencies rose by 22.1 per cent year-on-year, reaching 17,814 firms, according to federal statistics.

Attribution: Reuters.