Number of Insolvencies in Germany Keeps Rising

On Thursday, the Federal Statistical Office (Destatis) confirmed that insolvencies filed in Germany in June rose by 13.9 percent year-on-year.

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"The number of business insolvencies has already been rising steadily since August 2022," Destatis said.

In April, for which final figures are available, Germany's transport and storage sectors recorded the highest number of insolvencies per 10,000 companies, followed by other economic services, such as temporary employment agencies.

"The peak levels of corporate insolvencies seen during the financial crisis will not be reached by a wide margin," Christoph Niering, chairman of the Registered Association of Insolvency Administrators (VID), said.

Even during the COVID-19 crisis, government aid, such as a suspension of the obligation to file for insolvency and an extension of short-time work benefits, had kept business insolvencies in Germany at a low level.

However, following a 0.5 percent contraction in the fourth quarter of last year, Germany's gross domestic product (GDP) declined by 0.3 percent in the first quarter of 2023.

Downgrading its previous spring forecast, the Kiel Institute for the World Economy (IfW Kiel) now expects an economic contraction of 0.3 percent for the full year. Despite the recession, the Halle Institute for Economic Research (IWH) sees signs of improvement with regard to insolvencies.

"The IWH's leading indicators suggest a slight decline in insolvency figures again in the coming months," Steffen Mueller, head of IWH's Structural Change and Productivity Department, said in a statement.