The number of insolvencies of person and capital companies in Germany remained high in December, with a record number of company failures in the fourth quarter of 2024, similar to the financial crisis of 15 years ago. This is the result of an analysis by the Leibniz Institute for Economic Research Halle (IWH), which was published on Thursday.
According to the IWH, the number of company failures in Germany remained practically unchanged from the previous month, at 1,340. However, this is 24% more than in December 2023 and 54% more than in an average December from 2016 to 2019, before the COVID-19 pandemic.
Large employer closures often lead to significant and long-term income and wage losses for affected employees. The number of jobs affected by large insolvencies also provides a good approximation of the total number of jobs affected by insolvency: According to the IWH insolvency trend, more than 15,000 jobs were affected by the insolvency of the largest 10% of insolvent companies in December. This is more than a third higher than the previous month’s value.
In the fourth quarter of 2024, 4,215 person and capital companies with nearly 38,000 jobs were affected by insolvency. The number of insolvencies in the fourth quarter of 2024 was as high as it has been since the end of the major economic and financial crisis in mid-2009. The last quarter with higher values is even further back, in 2005.
“Years of extremely low interest rates have prevented insolvencies, and during the pandemic, insolvencies were delayed due to subsidies such as short-time work benefits” said Steffen Müller, head of IWH insolvency research. “The interest rate increase and the end of the subsidies have triggered catch-up effects in insolvencies since 2022.”
In the year-over-year comparison of the fourth quarter, the number of insolvencies increased by 36% from 2023 to 2024. The increase was strongest in Baden-Württemberg (+65%) among the larger federal states, and in the under- corporate services sector (+47%) among the major insolvency branches. In the manufacturing sector, the number of insolvencies increased by 32%. The increase in the number of affected jobs was only 17% compared to the same quarter of the previous year.