Business insolvencies reach 10-year peak level
Germany is facing the highest number of company bankruptcies in a decade, with a whopping 11,900 businesses filing for insolvency in the first half of 2025 - an increase of 9.4 percent compared to the previous year. This unsettling trend reveals a grim economic landscape for the country, according to Creditreform.
The Economic Downfall
Germany is mired in a deep, economic and structural crisis, as companies grappling with weak demand, rising costs, and persistent uncertainty struggle to keep their heads above water. Finances reserves are depleting rapidly, loans aren’t always accessible, and more businesses than ever are on the brink of collapse.
The Forecast Is Grim
With no significant economic recovery expected for the remainder of the year, the insolvency risk remains high. Creditreform's chief economist, Patrik-Ludwig Hantzsch, warns that the number of bankruptcies will continue to rise until the end of 2025.
Private Individuals Struggle Too
The negative trend isn’t confined to companies; private individuals are also struggling. In the first half of 2025, close to 37,700 people filed for insolvency, an increase of 6.6 percent year-on-year. Hantzsch attributes this to the persistent high cost of living, rising unemployment, particularly in the industrial sector, and overall economic instability.
The Costly Consequences
The economic repercussions of bankruptcies are substantial. The estimated default losses from corporate insolvencies amounted to around €33.4 billion in the first half of 2025, with each insolvency case resulting in an average loss of approximately €2.8 million - a significant increase compared to previous years.
Borderless Challenges
The rise in German bankruptcies is part of a broader trend affecting Western Europe. The region is experiencing a 16% increase in large-scale insolvencies, suggesting regional economic difficulties.
Looking Ahead
Despite a two-year recession, economists predict a slight growth in the German economy in 2025 for the first time. They anticipate this growth to be bolstered by political investments in infrastructure and armaments in the coming year.
[1] ntv.de, jpe/rts
[2] Bundesministerium der Finanzen (2025). Monthly financial report.
[3] Allianz Trade (2025). German insolvencies: rises in Q1 and Q2.
[4] Fachverband Hochrisikokredite e.V. (2025). German insolvencies continue to rise in Q2.
[5] Bundesagentur für Arbeit (2025). Unemployment at a ten-year high in Q2.
In light of the economic downfall, some community initiatives might consider implementing vocational training programs to assist those who have lost their jobs due to bankruptcies, to help them acquire new skills for potential employment in other businesses.
Additionally, with the average loss from corporate insolvencies reaching around €2.8 million, it is crucial for businesses to have a clear understanding of the community policy and financial implications that could impact their operation and longevity.
