Rise in corporate bankruptcies in Germany marks worst levels since 2017
Date
8/11/2024 5:41:20 AM
(MENAFN) In May, Germany witnessed a nearly 30 percent rise in corporate bankruptcies compared to the previous year, according to official data, signaling a trend that could see levels not seen since 2017. The German Statistical Office reported that local courts recorded 1,934 corporate bankruptcies during the month, with claims amounting to approximately 3.4 billion euros (USD3.7 billion). This significant increase reflects a troubling pattern, with preliminary data showing additional rises of 6.3 percent and 13.5 percent in June and July, respectively. These figures highlight the growing strain on German businesses amid broader economic challenges.
The rise in corporate failures comes against a backdrop of economic difficulty for Germany, exacerbated by Russia's cessation of gas supplies, which has significantly impacted the country's industrial sector. The nation's gross domestic product unexpectedly shrank in the second quarter, and the European Commission forecasts a modest growth rate of just 0.1 percent for the entire year. The Association of German Chambers of Industry and Commerce has noted increasing warning signs about the rise in corporate bankruptcies and anticipates that the total number will surpass 20,000 for the first time since 2017. This projection underscores the severity of the economic pressures facing German companies.
In response to these challenges, there is a growing call for systemic reforms to alleviate the burden on businesses. The Association has urged for measures to reduce energy costs, streamline taxes, cut bureaucratic red tape, and expedite approval and planning procedures. Such changes are seen as crucial to improving business conditions and supporting economic stability in Germany, which is grappling with a challenging economic environment and increasing financial distress among its corporate sector.
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