German insolvencies reach 10-year high as economic woes continue

About 23,900 German businesses are expected to file for insolvency this year, new data suggested on Monday, reported dpa.

This would mark the highest number since 2014 as firms continue to struggle with sluggish demand, high energy prices and heavy debt.

In 2014, nearly 24,100 businesses shut down, according to official figures.

If confirmed, the projections by the creditor protection association Creditreform would mean an 8% increase in insolvencies in 2025 compared to the previous year.

"Many businesses carry high levels of debt, find it difficult to obtain new loans and are struggling with structural burdens such as energy prices or regulation," Patrik-Ludwig Hantzsch, head of economic research at Creditreform, said.

Germany's "Mittelstand," a term used to refer to mid-sized, family-owned companies long viewed as a key bedrock of prosperity, is under particularly pressure, he said.

In a small ray of hope for Germany's ailing economy, insolvencies appear to increase at a slower pace this year compared to the previous years, Creditreform found.

Insolvencies were up by nearly 25% in 2023 and 2024 respectively, after state subsidies intended to keep businesses afloat during the coronavirus pandemic ran out.

Many economists expect that billions of investments in infrastructure and defence unlocked by the country's new conservative-led government will kickstart the economy in 2026, while only minimal growth is forecast this year following two consecutive years of recession.

This might also slow the increase of insolvencies, Creditreform said. However, the association urged further measures, including to bring down energy prices.

Creditreform does not expect insolvency figures to stagnate or even drop next year, Hantzsch said.