Business Failures Skyrocket in Western Europe: A Comprehensive Analysis
Record-breaking corporate collapses surge in Western Europe, reminiscent of 2013's financial turbulence. - Record-breaking bankruptcies surge in Western Europe, reaching a peak not seen since 2013.
The past year has witnessed an alarming surge in business failures across Western Europe, reaching a high not seen since 2013. A staggering 190,449 cases were recorded, a 12.2% increase over the previous year, with more insolvencies likely on the horizon.
Patrik-Ludwig Hantzsch, head of Creditreform Economic Research, sheds light on the situation, "Three years of economic stagnation and downturn aren’t just impacting Germany. Europe as a whole is grappling with weak economic development."
Constantly looming crises leave businesses with little room to recover. Since the 2021 low point with 112,686 corporate insolvencies, the number of failures has increased by a staggering 70%. This alarming trend isn’t solely attributed to the COVID-19 pandemic but also rising energy prices, weak demand, and geopolitical uncertainties that burden numerous companies.
In 15 of the 17 Western European countries analyzed, the number of insolvencies increased year-on-year. France tops the list with a record-breaking 66,088 cases, a 17.4% increase, followed by Greece (plus 42.5%), Ireland (plus 32.0%), and the Netherlands (plus 31.7%).
The analysis shows that only Denmark (minus 11%) and the UK (minus 4.8%) recorded lower corporate insolvencies compared to the previous year. However, Germany reported a significant increase of 22.5% with 22,070 companies filing for insolvency.
The Construction sector Braces for Impact
In 2024, the construction industry bore the brunt of the economic pressure, witnessing a 15.4% increase in failures. Factors such as rising construction costs, high financing costs, and waning demand have added to the industry's woes. Moreover, the number of insolvencies increased significantly by 14.2% in the service sector.
Business failures in Western Europe are the result of a complex interplay of factors, including economic and financial crimes, sector-specific challenges, global economic pressures, energy and infrastructure disruptions, and general economic conditions.
Illuminating Factors Driving Business Failures
- Economic and Financial Crimes: Such transgressions can threaten business stability, erode trust, and increase operating costs, leading to financial instability and reduced consumer confidence[1].
- Sector-Specific Challenges:
- Automotive Industry: Struggles in this sector include regulatory pressures, competition from other regions, and policy changes, such as a proposed ban on petrol and diesel cars, leading to factory closures and job losses[2].
- Retail Sector: The shift towards online shopping and economic downturns have forced many retailers to adapt or close.
- Global Economic Pressures: These factors can increase costs, reduce demand for European goods, and create uncertainty, impacting businesses across various sectors[2].
- Regulatory Environment: Changes in regulatory policies, such as those related to technology and digital infrastructure, can impose additional costs, particularly on small businesses[3].
- Energy and Infrastructure Disruptions: Disruptions in critical infrastructure, as seen in the 2025 Iberian Peninsula blackout, can create widespread business disruptions and further amplify challenges faced by those reliant on consistent power[5].
- General Economic Conditions: Economic downturns, inflation, and consumer spending habits can all influence business viability, leading to reduced demand and further business failures[4].
The escalating number of business failures in Western Europe highlights the need for urgent action to address these pressing issues and support businesses navigating the challenging economic landscape.
- Western Europe
- Business failure
- Economic downturn
- Insolvency
- Germany
- Europe
- Chronic crisis
- Neuss
- Patrik-Ludwig Hantzsch
- Coronavirus
- Economic and financial crimes
- Sector-specific challenges
- Global economic pressures
- Energy and infrastructure disruptions
- General economic conditions
- The increase in business failures across Western Europe, as seen in Neuss, Germany, has been influenced by a chronic crisis that includes economic downturns, insolvencies, and the impact of the coronavirus.
- The head of Creditreform Economic Research, Patrik-Ludwig Hantzsch, points out that this economic stagnation is affecting not only Germany but also Europe as a whole.
- While some sectors like the automotive and retail industries are grappling with sector-specific challenges such as regulatory pressures, competition, and economic downturns, others like the construction sector are witnessing a surge in failures due to rising costs and waning demand.
- The escalating number of business failures in 15 out of 17 Western European countries analyzed is a result of a complex interplay of factors, including economic and financial crimes, global economic pressures, energy and infrastructure disruptions, and general economic conditions.
