A Glimpse of Hope? Less Corporate Bankruptcies in Germany?
Decrease in New Filings for Business Insolvency - Reduced number of companies filing for bankruptcy observed.
Peeking into the economic landscape of Germany, there's a flicker of optimism in the face of corporate bankruptcies. Preliminary data from the Federal Statistical Office reveals that for the first time since March 2023, fewer insolvency proceedings were initiated in a month than the same month a year prior, as seen in May 2025.
The statisticians in Wiesbaden recorded 0.7 percent fewer insolvency applications than the corresponding month in 2024. This drop continues a trend that started in March, with the growth rate already being in the single digits in the two preceding months.
However, it's too early to celebrate just yet. The insolvency courts still have a say in whether all these cases will be officially recorded. The Federal Office notes that the actual time of the insolvency application often lies approximately three months earlier.
Fewer bankruptcies than last year? Not so fast.
The latest monthly analysis by the Leibniz Institute for Economic Research Halle (IWH) paints a more nuanced picture. After reaching its highest level since 20 years in April, the number of insolvencies among German firms decreased significantly in May. There were 1,478 corporate bankruptcies, a 9 percent decrease from the previous month but a 17 percent increase compared to May 2024.
"The leading indicators suggest slightly decreasing insolvency numbers for June," predicts Steffen Müller, head of IWH insolvency research. "However, we will continue to see more corporate bankruptcies in Germany than in the previous year."
Looking ahead to the full year, various credit agencies expect more corporate bankruptcies in 2025 than in 2024. According to official figures, 21,812 cases were registered in the previous year, a record high that was expected after the state support for the corona pandemic expired. Factors such as high energy prices, excessive bureaucracy, and political uncertainty continue to weigh heavily on businesses.
The local courts reported 5,891 initiated corporate insolvencies in the first quarter of 2025, a 13.1 percent increase compared to the same quarter a year prior. The claims of the creditors amounted to around 19.9 billion euros, compared to 11.3 billion euros in the first quarter of 2024.
While a glimmer of hope appears in the form of decreasing insolvency filings in May, the broader trend for 2025 remains upward. In the midst of rising annual insolvency numbers and increasing job losses, it's essential to stay vigilant and supportive of the corporations navigating this challenging economy.
Sources:
- Allianz Trade projects a 11% increase in German insolvencies in 2025 – Statista
- Forecast for corporate insolvencies in Germany 2025-2027 – Statista
- German insolvencies up in April even as big insolvencies fall – Handelsblatt
- April insolvency figures reached crisis levels – Abendzeitung
In the current economic landscape of Germany, the trend for 2025 indicates an upward trajectory for corporate insolvencies, despite a slight decline in May's insolvency filings. To counteract this upward trend and protect businesses in this challenging economy, it's crucial to embrace and support community policy initiatives, including vocational training programs, which can help stabilize businesses financially and improve their overall performance within the business sector.
