BERLIN, Jan. 9 (Xinhua) -- Germany recorded its highest number of company insolvencies since 2009 in the fourth quarter of 2024, driven by rising interest rates and increasing costs, a study by the Halle Institute for Economic Research (IWH) revealed on Thursday.
A total of 4,215 company insolvencies were registered during the quarter, affecting nearly 38,000 jobs -- the highest level since the financial crisis in mid-2009. This represents a 36-percent increase compared to the same period in 2023, underscoring the economic challenges facing businesses.
The IWH attributed the surge partly to the end of years of ultra-low interest rates and the phasing out of pandemic-era subsidies that had previously kept insolvency rates unusually low.
"Years of extremely low interest rates prevented many insolvencies, and during the pandemic, government subsidies like short-time work benefits helped companies avoid bankruptcy," said Steffen Mueller, head of insolvency research at IWH. "However, the recent rise in interest rates and the withdrawal of subsidies have triggered a catch-up effect in insolvencies starting in 2022."
The study also revealed sector-specific trends, with the services industry experiencing a 47 percent year-on-year increase in insolvencies, followed by a 32 percent rise in the manufacturing sector. Among the larger federal states, Baden-Wurttemberg saw the steepest increase, with insolvencies surging by 65 percent.
Mueller noted that while the sharp rise in insolvencies is painful, it also represents a necessary market correction, creating opportunities for future-oriented businesses.
