The number of corporate insolvencies filed with the authorities in Germany in November rose by 18.8 percent year-on-year, according to provisional figures published by the Federal Statistical Office (Destatis) on Tuesday.
From January to September, local courts reported around 25 percent more insolvencies than in the first nine months of 2022. According to Destatis, the resulting claims of creditors were estimated at around 21.1 billion euros (22.79 billion U.S. dollars), almost twice as much as in the same period last year.
According to a recent study by credit insurer Allianz Trade, major insolvencies of companies with a minimum annual turnover of 50 million euros even soared by 73 percent in the first nine months of this year.
The fashion industry, hospitals and mechanical engineering were most affected. “Major insolvencies have returned this year and are on course to reach their 2020 peak,” Maxime Lemerle, head of insolvency research at Allianz Trade, said last month.
Well-known German fashion companies, including Peek & Cloppenburg and SportScheck, filed for insolvency in 2023. Now Germany’s largest department store chain, Galeria Karstadt Kaufhof, is also in danger after its Austrian parent company Signa Holding went bankrupt.
The German Association of Towns and Municipalities (DStGB) fears that more than 90 Galeria locations could be on the brink of closure. “Whether and to what extent a reorganization process will lead to success is currently completely open,” DStGB Secretary General Gerd Landsberg said at the end of November.
Weak domestic consumption and low export demand are putting pressure on Europe’s largest economy. Following an expected 0.4 percent economic contraction this year, the German government still expected a gradual recovery with 1.3 percent growth in 2024 in its autumn forecast.
Germany’s industry, however, fears that the country could slide deeper into recession due to a budget gap that was caused by the failed reallocation of 60 billion euros worth of COVID-19 emergency funds for climate measures after a recent court ruling.
If government spending were to be cut to the full extent as per the court’s ruling, Germany’s gross domestic product (GDP) could fall by up to 0.5 percent next year, the Federation of German Industries (BDI) warned earlier this month. (1 euro = 1.08 U.S. dollar) ■