"Deteriorating Financial Landscape" Germany Experiences a Spike in Corporate Insolvencies, Hitting a Decade High
Record-breaking surge in business bankruptcies reaches a decade-long peak
Crashing through the decade mark, Germany has seen a staggering 11,900 corporate insolvencies in the first half of 2025 - a steep 9.4% increase from the previous year. As reported by Creditreform, this alarming number points towards a deep-rooted economic and structural crisis, with companies grappling with weak demand, soaring costs, and unrelenting uncertainty.
"From a perspective of hope, Germany appears to be stuck in a profound economic crisis," comments Creditreform chief economist Patrik-Ludwig Hantzsch. "Firms are burning through their financial reserves, loans aren't always forthcoming, and businesses struggle to buck the tide of adversity."
Moreover, the economic despair doesn't stop at businesses. The insolvency rate among private individuals is on an unwanted three-year uptrend, with 37,700 cases reported in the first half of 2025.
"Rising living costs and job losses, particularly in the industry, have placed immense strain on households," explains Hantzsch. The rising insolvency rate sets off a chain reaction, with businesses and households alike teetering on the brink of collapse.
The devastating consequences of these insolvencies are far-reaching, according to Creditreform. The estimated loss from corporate insolvencies surged to a whopping 33.4 billion euros in the first half of the year - clocking in at an average loss of 2.8 million euros per insolvency case.
As for the economy, economists foresee a sluggish recovery in the latter half of the year, with growth expected for the first time in two years. This growth, however, is anticipated to be slight, buoyed in part by political investments in infrastructure and armaments.
The increase in insolvencies, however, is not entirely unexpected. Allianz Trade projects that insolvencies will rise by about 11% in 2025 to approximately 24,400 cases, with a further increase to 25,050 cases in 2026. This surge stems largely from economic stagnation, adverse tariff conditions, and an escalating tariff spiral that chokes supply chains and elevates operating costs.
Moreover, the insolvency increase is emphatically not confined to small businesses. Large-scale insolvencies - centered mainly in Western Europe - paint a dismal picture of severe distress among large firms. The job losses and supply chain disruptions resulting from these insolvencies threaten to erode investor confidence, weaken critical export sectors, and strain banks and insurers.
The economic environment in 2025 requires close monitoring, with potential policy measures required to support corporate solvency and stimulate growth. As the year progresses, it remains to be seen whether or not the German economy can navigate the tempestuous waters of insolvency and emerge stronger on the other side.
[3]: Allianz Trade Insolvency Report, H1 2025[4]: The Economic Intelligence Unit, Germany Insolvency Forecast, 2025-2026[5]: Bundesbank Research Paper, German Insolvencies and the Economy, 2025
In the face of this deteriorating financial landscape, it's crucial for the German government to address the issue of corporate insolvencies, possibly by implementing community policies that could include vocational training programs to improve businesses' financial management skills.
At the same time, finance institutions should consider offering more accessible funding options to support businesses, as they strive to overcome the challenges posed by the current economic crisis and ensure the sustained growth of local businesses and the overall economy.
