Germany’s corporate insolvency rates experienced a notable decline in November, marking the first time in three and a half years that filings have fallen below the levels recorded in the same month of the previous year. An analysis released by the Leibniz Institute for Economic Research Halle (IWH) reveals 1,293 corporate and capital company insolvencies registered, 17 percent fewer than in October and 3 percent lower than in November 2023. However, the IWH cautions against interpreting this as a definitive turnaround, highlighting that current figures remain significantly elevated compared to pre-pandemic norms.
While the decrease offers a temporary respite, the situation remains precarious. The number of jobs affected by these insolvencies in the ten percent largest impacted companies amounted to 9,000 in November, down considerably from October (-30 percent) and the previous year (-25 percent). Nevertheless, this figure still sits 26 percent above the average for November between 2016 and 2019, the years preceding the COVID-19 pandemic. Job losses within the industrial sector have also seen a reduction, returning to levels observed just before the pandemic, but indicating ongoing fragility.
Steffen Müller, Head of Insolvency Research at the IWH, tempered expectations, stating that indicators suggest a continued, albeit muted, insolvency landscape for December. However, he anticipates a resurgence in filings for January and February, underscoring the lack of a lasting trend reversal. “The November decrease is a welcome sign, but it represents at best a short-term breathing space” Müller stated. The institute’s assessment points towards a stabilization at a high level, rather than a genuine cause for optimism, prompting renewed scrutiny of government policies aimed at long-term economic stability and support for vulnerable businesses. The persistent comparative highs in insolvency figures raise questions regarding the efficacy of existing safeguards and the potential for future economic shocks to further destabilize the corporate sector.