Distress for Germany as ‘sick man of Europe’ sees insolvencies ‘rising sharply’
Company insolvencies in Germany are significantly increasing month on month as the economy remains in a state of stagnation in a worsening headache for Chancellor Olaf Scholz.
In July 2023, insolvencies registered a notable increase of 23.8 percent compared to the same month in 2022. This upward trend in insolvencies has remained consistent since August 2022.
Journalist Holger Zschaepitz commented on statistics drawn from June on X, formerly known as Twitter: “Good Morning from #Germany, where the number of corporate insolvencies is rising sharply.
“In June, 1548 comps went bankrupt, +36 percent YoY. In H1 2023, German district courts reported 8,571 corporate insolvencies filed. That was 20.5 percent more than in the 1st half of 2022.” [sic]
Observers are already drawing comparisons to the late 1990s and early 2000s, a period when the nation was often referred to as “the sick man of Europe” due to its slow economic growth.
The German economy is projected to contract by 0.4 percent in 2023 – the only major European nation experiencing negative growth.
Such a contraction has lowered the European Commission’s (EC) financial outlook, which acknowledged in a brand new report that output throughout the bloc will solely rise by 0.8 p.c this 12 months, in distinction to the earlier forecast of 1.1 p.c.
According to the EC’s report, the Summer Economic Forecast 2023, Germany’s financial slowdown could be attributed to elements together with actual wage declines, weakened exports, and diminished public consumption ensuing from the impression of COVID-19.
Germany has been hit notably exhausting by the conflict in Ukraine on account of its heavy reliance on Russian energy imports.
Ralph Solveen, an economist at Commerzbank, informed Reuters: “If the government does not take decisive action, Germany is likely to remain at the bottom of the growth table in the euro area.”
However, Germany isn’t the one European nation battling insolvencies.
In France, the variety of enterprise bankruptcies elevated 35 p.c on this 12 months’s second quarter in comparison with the identical interval final 12 months.
In England and Wales, following seasonal adjustment, there have been a complete of 6,342 firm insolvencies within the second quarter (Q2) of 2023.
This determine marks the best stage since 2009, indicating a 9 p.c enhance in comparison with Q1 of 2023 and a 13 p.c rise in comparison with Q2 of 2022.