Authored by Thomas Brooke via Remix News,
Germany is bracing for a sharp rise in bankruptcies this year, with an anticipated 25–30 percent increase compared to 2024, reaching levels not seen since the 2009 financial crisis.
The grim forecast, reported by Handelsblatt based on an analysis by restructuring consultancy firm Falkensteg, highlights deepening struggles in key industries and the broader economy.
In 2024, 364 major companies with annual revenues exceeding €10 million filed for bankruptcy — a 30 percent increase over the previous year. This marks a stark contrast to 2020, the first year of the Covid-19 pandemic when 292 such companies went bankrupt.
The hardest-hit sectors include automotive suppliers, mechanical engineering, construction, and healthcare.
“We are at the level where individual months are definitely 20-year highs,” said the head of insolvency research at Leibniz -Institute for Economic Research Halle (IWH), Steffen Müller, as cited by the German broadsheet.
“At the time of the financial crisis in 2009, we had around 1,400 insolvent partnerships and corporations per month. Now we have reached that level again,” he added.
Automotive suppliers have been identified as the most at-risk sector for insolvency in 2025, with one in six major bankruptcies in 2024 stemming from this industry. The transition to electric vehicles, declining car production, and weaker demand in key markets like China have exposed cracks in the sector’s foundation.
“We have rested on our laurels for too long,” said Düsseldorf insolvency administrator Dirk Andres, pointing to outdated business models and rising competition.
Similarly, mechanical engineering firms saw a 33 percent jump in bankruptcies last year. Flagship companies like Manz and Illig, despite their global market leadership, have faced significant challenges due to falling demand, higher production costs, and international competitors offering comparable technology at lower prices. The result has been mass redundancies with Illig alone reducing its workforce by nearly half.
The construction industry took a heavy hit last year, with bankruptcies rising by 53 percent. Increased costs and higher interest rates brewed a perfect storm for a sharp decline in housing construction, which is set to continue into the new year. Only 220,000 apartments are expected to be built in 2025 — far below the government’s target of 400,000.
Labor shortages and rising costs also affected the healthcare sector with 23 major bankruptcies recorded last year and two-thirds of hospitals and clinics expecting their balance sheet to look even bleaker this year, according to a recent report from the German Hospital Association.
As Remix News previously reported in November, the Federal Statistical Office expected bankruptcies in 2024 to top 20,000, while last month the Ifo Employment Barometer, which tracks hiring and job cuts, fell to its lowest level since 2020, indicating widespread layoffs and hiring freezes across industries.
“Fewer and fewer companies are adding staff,” said Klaus Wohlrabe, who leads Ifo surveys. “In contrast, the proportion of companies that want to cut jobs is increasing. Almost all sectors are considering job cuts.”
Tyler Durden
Thu, 01/09/2025 – 05:10
