Corporate Bankruptcies In Germany Touch 2008’s Levels, Record High In Switzerland

A survey conducted in December 2024 revealed a decline in German corporate confidence. 

Corporate bankruptcies in Germany have risen to levels comparable to those seen during the 2008 financial crisis. German corporates are in a range where some months could easily reach their highest levels in 20 years. During the financial crisis, markets had around 1,400 partnerships and companies insolvent per month, and now they have reached this level again.

While the number of small bankruptcies was similar to that of large bankruptcies back then, today it stands at around 500 small companies, those with up to 10 employees. In light of larger companies going bankrupt, this means a greater loss of economic assets. A report by the credit agency Creditreform in December 2024 confirmed this trend, showing that bankruptcies among German companies reached their highest level since 2015 in 2024. A total of approximately 121,300 bankruptcies were recorded in Germany in 2024, including those of individuals and others, representing a 10.6% increase compared to 2023.

The crises of recent years are now hitting companies with a time lag in the form of bankruptcies. This means that bankruptcy figures could soon be on par with the record levels of 2009 and 2010, when more than 32,000 companies went bankrupt. Some of these bankruptcies can be attributed to the lingering effects of the COVID-19 pandemic and years of extremely low interest rates set by the European Central Bank.

Corporate Confidence

In a related development, a survey conducted last month showed a larger-than-expected decline in German corporate confidence in December, affected by a negative assessment of the coming months amid geopolitical uncertainty and an industrial recession in Europe’s largest economy.

The Ifo Institute said its business climate index fell to 84.7 points in December from 85.6 in November. The survey, which covered nearly 9,000 company managers, recorded an improvement in the assessment of current conditions, but the expectations index fell sharply to 84.4 points in December from 87 in November. The victory of Donald Trump in the US presidential election, along with the political deadlock in Germany ahead of early elections in February, has heightened uncertainty at a time when the economy is facing strong headwinds.

Soaring To Record High in Switzerland

Switzerland experienced a 15% increase in company bankruptcies in 2024 compared to 2023, according to Creditreform. The number of pure corporate insolvencies, which include bankruptcy publications due to over-indebtedness and deficiencies in the organization, climbed by 18%. The increase was particularly sharp in Nidwalden, Appenzell Innerrhoden, and Graubünden, while in Zug,

Geneva, Schwyz, and Vaud, bankruptcies were at a high level. The construction industry was responsible for every fifth company bankruptcy, with trade and business services accounting for 18% and hospitality accounting for 11%. Creditreform experts predict another increase in bankruptcies in 2024 due to an amendment to the Federal Act on Debt Enforcement and Bankruptcy, which requires taxes, duties, or other payments to be claimed through bankruptcy proceedings. Additionally, the number of new start-ups increased, with almost 53,000 new companies registered in the commercial register in 2024, a 2% increase from 2023.