Corporate Insolvencies Skyrocket Across Western Europe: A Stormy Economic Forecast
Corporate insolvencies in Western Europe witness a substantial hike once more. - Business collapses in Western Europe rise once more
After three years of economic turmoil, Western Europe is reeling from a sharp increase in corporate insolvencies, with the number of cases surging by nearly 70% since 2021. Creditreform reported a 12.2% year-on-year increase, signaling more pain ahead for businesses. France, in particular, is a hotspot, with cases skyrocketing by 17.4%.
Patrik-Ludwig Hantzsch, head of Creditreform Economic Research, explains, "Europe's sluggish economic recovery has led to a significant increase in insolvencies." Construction industry has felt the brunt of the wave, with a 15.4% increase in insolvencies due to rising costs, high financing expenses, and weakening demand.
The troubles don't end in Western Europe. Most Central and Eastern European countries have seen an increase in corporate insolvencies, with Poland, Latvia, Slovenia, Lithuania, and Estonia registering particularly significant rises. However, a sharp decrease in Hungary has offset the overall picture, as the insolvency numbers had surged in the previous years.
Across the Atlantic, the USA is grappling with a similar predicament, with insolvencies increasing by 16.6%. Steadfast economic growth has been overshadowed by high interest rates and decreasing consumer spending, putting companies at risk. Yet, the US figures still lag behind the pre-COVID-19 levels of 2018 and 2019.
- Western Europe
- Creditreform
- Corporate insolvency
- Company insolvency
- Credit agency
- Germany
- Patrik-Ludwig Hantzsch
- COVID-19
- Neuss
- Eastern Europe
- Europe
- Hungary
Economic Stress Triggers a Wave of Bankruptcies
Europe's prolonged economic downturn, surging energy costs, sluggish consumer demand, and geopolitical uncertainties have created a toxic recipe for soaring corporate insolvencies. Global trade tensions and the resulting tariff hikes have added more fuel to the fire, constricting businesses in their vulnerable state.
Germany: A Casualty of Weak Demand and High Energy Prices
Germany, the economic powerhouse of Western Europe, has borne the brunt of the insolvency wave. High energy prices, weak consumer demand, and geopolitical risks have taken a heavy toll on the country's businesses, despite the government's efforts to counteract these forces through fiscal stimulus measures.
A Comparison: Eastern Europe and the United States
While Eastern Europe is yet to report detailed figures, the region undoubtedly faces similar economic headwinds. The United States, on the other hand, is bracing for an even more significant rise in insolvencies, with a projected increase of 16% in 2025. The global trend forecasts a 7% increase in 2025 and 4% in 2026, painting a grim picture for businesses worldwide.
An Unsettling Outlook for the Future
The tsunami of corporate insolvencies sweeping across Western Europe, with Germany and France at the eye of the storm, is the result of a potent mix of weak growth, sky-high energy prices, widespread uncertainty, and burdensome trade tensions. As the USA prepares itself for a sharper rise in insolvencies, it's clear that businesses globally are struggling under the weight of these economic pressures.
- The inflation of corporate insolvencies across Western Europe, as reported by Creditreform, is a direct consequence of Europe's sluggish economic recovery, according to Patrik-Ludwig Hantzsch, head of Creditreform Economic Research.
- Germany, facing high energy prices, weak consumer demand, and geopolitical risks, has been heavily affected by the rise in corporate insolvencies, despite the government's attempts to mitigate the situation through fiscal stimulus measures.
- While detailed figures from Eastern Europe are yet to be reported, the region is expected to face similar economic challenges, mirroring the trend seen in Western Europe.
- The United States, forecasting a 16% increase in insolvencies by 2025, is poised to experience an even more significant wave of company bankruptcies, aligning with a projected 7% increase in global insolvencies in 2025 and 4% in 2026.
