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Business closure, here in Stuttgart (photo from 2021)

Photo: Bernd Weißbrod / dpa

According to credit insurer Allianz Trade, many companies worldwide will see an increase in insolvencies for the third year in a row in 2024.

Economists at the Hamburg-based Allianz subsidiary predict that this development will also affect Germany with a slight delay.

The reasons for this are the persistently weak economic development, increased loan interest rates and the numerous structural challenges facing the German economy.

These problems would probably “bring even more German companies into financial difficulties.”

The number of bankruptcies among German companies is expected to increase by 13 percent in 2024 compared to the previous year.

“This increase has already begun, particularly in the second half of 2023,” said Milo Bogaerts from Allianz Trade.

Here the number of bankruptcies has visibly accelerated with a 25 percent increase compared to the second half of the previous year, "with the hospitality industry, retail, the construction industry and B2B services making a significant contribution."

B2B (business to business) refers to transactions between companies, not with consumers.

No permanent increase

Insolvencies can become a problem for the economy, for example because many employees lose their jobs.

But also because other companies are stuck with unpaid invoices or banks can no longer fully collect loan amounts granted.

So is Germany threatened with a potentially devastating wave of bankruptcies?

This is unlikely to happen.

The increase in company bankruptcies is indeed strong.

But this is also because the number of bankruptcies has been extremely low in recent years.

According to the Federal Statistical Office, their number has been falling for many years.

In 2004, almost 40,000 corporate bankruptcies were registered, but in 2022 there were only 14,590.

Before the outbreak of the corona pandemic - and with a good economic situation - there were almost 19,000 (2019).

Allianz Trade's forecasts should be seen against this background: According to the analysis, the number of company bankruptcies is likely to rise to 20,260 cases in 2024, but then fall again.