Finance

German company bankruptcies increase in March

According to the statement made by the German Federal Statistical Office (Destatis), bankruptcy filings in March increased by 13.2 percent compared to February. In February, there was an increase of 10.8 percent compared to the previous month.

Destatis reported that bankruptcy filings are often included in the statistics with a delay.

Despite the Kovid-19 crisis, the Russia-Ukraine war and the ensuing energy crisis in Germany, the partial suspension of the obligation to file for bankruptcy, the expansion of short-time working benefits, comprehensive state aids, and the number of companies that went bankrupt in 2020, 2021 and 2022 were at a historically low level.

Experts now predict more company bankruptcies in Germany this year due to higher production costs, rising personnel costs, and a significant rise in interest rates.

Insurance company Allianz Trade expects a 15 percent increase in bankruptcies this year.

In Germany’s Halle Institute for Economic Research (IWH), in its bankruptcy trends report on April 6, it was reported that the number of companies that went bankrupt in March, despite improving economic expectations, reached the highest level of the last three years.

IWH stated that increased production costs due to expensive energy and materials, increased personnel costs and significant increase in interest rates are a burden for many companies.

Bankruptcy filings of companies and partnerships in Germany rose by 24 percent to 959 last month, compared to March 2022, according to IWH’s report. Thus, bankruptcies rose to the highest level since May 2020.

While the Russia-Ukraine war has led to higher energy costs in Germany, continued disruptions in international supply chains are making many intermediate goods imported for production in the country more expensive.

After the Kovid-19 crisis caused significant job losses for many sectors, the energy crisis, the lack of qualified employees and materials and high inflation have negatively affected the German economy for months.

The monetary policy tightening of the European Central Bank (ECB) also increases the financing costs of German companies.

German unions are also demanding higher wage increases for workers in the face of unusually high inflation.

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