Wave of bankruptcies in Germany continues

(Patria) - The number of company bankruptcies in Germany in the first three quarters of this year has reached its highest level in eleven years.

Who is most affected and whether the situation will improve soon is reported by Deutsche Welle this morning.

"The wave of insolvencies continues. Small and medium-sized enterprises in particular are getting into difficulties," Reuters news agency quoted Volker Treier, chief analyst at the German Chamber of Industry and Commerce (DIHK), as saying last Friday.

A DIHK survey showed that almost every third company with fewer than 20 employees fears a worsening business situation. These companies account for about 85 percent of all firms in the country.

On the same day (12.12.2025), the Federal Statistical Office announced that by the end of September, German courts had reported 18,125 applications for insolvency proceedings for companies – almost 12 percent more than in the same period last year. This made the number of company bankruptcies in Germany in the first three quarters of 2025 the highest in eleven years.

Professor Steffen Müller also confirms that small businesses are particularly at risk. Insolvencies are "largely occurring in the small business sector," emphasized the head of insolvency research at the Leibniz Institute for Economic Research in Halle in an interview with DW.

In terms of the number of employees, "the average size is ten employees, but most companies are even smaller".

Although it does not play a decisive role in this consideration, the current wave of bankruptcies is also visible in the private sphere. The number of personal insolvencies also increased in Germany last year. In the first three quarters of the current year, 57,824 cases of consumer insolvency were recorded – more than eight percent compared to the same period last year.

Although the "bankruptcy vulture" is mainly circling over small businesses with only a few employees, the number of jobs lost or seriously threatened has also significantly increased due to the rise in insolvencies of partnerships and corporations. This was calculated by the Leibniz Institute for Economic Research, determining around 170,000 affected jobs for the current year. Before the corona pandemic, there were fewer than 100,000.

Klaus-Heiner Röhl, an economist at the Cologne Institute of the German Economy, would not want to overestimate the impact of this trend on the labor market. Although, as he wrote, "insolvencies contribute to a slightly increased unemployment, the development of the situation is not dramatic".

Steffen Müller sees it somewhat differently. According to his calculations, in 2025, "around 200,000 affected jobs should be expected – which is relatively high. In the years before the pandemic, it was about half as many". Some of these jobs "will probably really disappear, as insolvencies lead to company closures".

However, he also points out that many jobs are created in other companies. The effects on the labor market are "bearable overall. One must not forget that in the process of market cleansing, workers often move from weak to strong companies".

For Müller, the current figures are not entirely unexpected: "Overall, an increase in insolvencies could be expected. However, the scale is somewhat surprising". Klaus-Heiner Röhl is also not surprised: "In principle, such a development was to be expected, given the duration of the economic weakness, the number of insolvencies could have been even higher".

Röhl does not see the reasons for the high number of bankruptcies solely on the side of entrepreneurs: "The main reason is probably the almost three-year sluggish economy, with a stagnating or slightly declining economy".

Energy prices, the war between Russia and Ukraine, and the transition to climate neutrality also contribute to this, further complicating business for companies. "To what extent policy with delayed reforms and individual companies with delayed adjustments have contributed to the problems is difficult to quantify," says Röhl.

Müller also does not want to assign blame to just one side: "The reasons for insolvency are always very individual". Problems often arise from individual wrong decisions, such as poor product choice, conflicts between management and employees, disputes with important owners or other stakeholders.

- When this is combined with sharply rising costs, structural changes, geopolitical uncertainties, and tariffs, individual weaknesses and mistakes lead to insolvency more quickly. Completely healthy, well-positioned companies, which are among the best in their industry, have to disappear solely due to worse framework conditions – this probably does not happen often – emphasizes Müller.

The Association of Insolvency Administrators and Supervisors in Germany (VID) views the current situation relatively calmly. VID President Christoph Niering told the German Press Agency: "After the catch-up effects from the corona period and the associated increase in insolvencies, the development is normalizing again. However, it is not yet a trend reversal, but it is a light at the end of the tunnel".

Müller expresses himself similarly: "In 2026, we will probably be at approximately the same high level as in 2025. However, this is only conditionally good news, because we have slowly reached the red zone". Therefore, there should be no further deterioration. Because a look at the key group of partnerships and corporations shows: "We last faced similar proportions 20 years ago".

Economist Röhl also sees a glimmer of hope: "If the economy grows by about one percent next year, as various institutes expect, there should also be a calming of insolvencies". However, a reduction in the number of insolvencies will not happen on its own: "Structural problems such as US tariffs, competition from China, and energy costs remain present".