Coface is expecting high numbers of insolvencies in Germany for a prolonged period. The number of business insolvencies reached the total recorded in 2023 in the first five months of 2024.
The number of business insolvencies in Germany has shot up in 2024 and is currently at an eight-year high; and insolvencies are likely to remain high for an extended period.
According to the analysis, figures released by the Federal Statistical Office of Germany show that the number of insolvencies reached 19,341 in May 2024, the highest level since June 2016. Following a period of low figures due to measures introduced in the wake of the Covid pandemic, insolvencies have risen significantly since 2023 and remain at a high level. From January to May 2024 – the last month for which data are available – the figures were 29 per cent higher than in 2023.
The transport and storage sector is worst affected, with 12.2 cases per 10,000 companies in May 2024. The automotive industry recorded the highest growth rate, at 120 per cent. The agri-food sector is the exception: the number of insolvencies fell by 16 per cent from January to May 2024.
Corporate insolvencies are associated with various risks, with the actual risk often being the expected claims arising from these insolvencies. These totaled €26.1 billion from January to May 2024, representing an increase of 118 per cent year on year. 2024 is likely to be one of the most expensive years in the past two decades. The real estate sector recorded the largest increase in claims (1,099 per cent), followed by trade (216 per cent including retail trade) and the finance and insurance sector (142 per cent).
Although the European Central Bank has introduced its monetary easing cycle, credit conditions for German banks continue to tighten. This strained financial situation, combined with a very slow trend reversal in the German economy, is likely to lead to a prolonged phase of higher insolvency figures.
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