More and more companies in Germany are going bankrupt, purchasing power has decreased

(Patria) - The number of insolvent companies in Germany is rising again. In the first six months of this year alone, the credit bureau Kreditreform registered 8,400 bankruptcies.

The bureau announced that this is an increase of 16.2 percent compared to the first half of last year. A proportionally higher increase was last recorded in 2002, according to experts, dpa reports.

“The enormous financial burden due to high energy and material prices is showing its effect. After years of declining insolvencies, the trend has now reversed,” said Patrick-Ludwig Hantze, director of economic research at Kreditreform.

However, although it is a significant increase, it is more of a normalization than a wave of insolvencies, the expert assessed.

The poor consumer climate also contributed to this development.

“Inflation has shaken consumers and largely curbed their willingness to spend,” Hantze assessed. In addition, he added, for many companies, the funds generously distributed by the state during the pandemic, which now need to be repaid, are becoming a problem.

In contrast to companies, the number of personal insolvencies in the first semester, at 33,200, was at the same level as last year.

“The energy crisis and price increases have not yet had a tangible impact on the number of consumer insolvencies,” Hantze said.

One of the reasons for this, in his assessment, is that the labor market, despite the current technical recession, has so far proven resilient. In addition, the more difficult economic situation only affects consumer insolvencies with a certain delay.

The credit bureau expects a further tightening of the situation for companies by the end of this year.

“The economic climate for companies remains very tense due to inflation, but also due to interest rate policy,” Hantze said, adding that the number of company bankruptcies could accelerate in the coming months.