Insolvency trend threatens more job losses in 2025
The number of corporate insolvencies will increase to around 22,400 cases in 2024, according to a new analysis by the credit rating agency Creditreform. The statistics are based on data collected up until the beginning of November, and then extrapolated for the rest of the year.
Creditreform expects the highest level of corporate insolvencies since 2015, with an increase of more than 24% compared to last year. And there are no signs of a trend reversal any time soon: „We expect this dynamic insolvency trend to continue at least for 2025,“ said Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research, at the presentation of the figures to journalists in Frankfurt. The record levels seen in 2009 and 2010 could even come into sight again. At that time, there were more than 32,000 corporate insolvencies per year.
More large companies in insolvency
The majority of insolvency cases concern medium-sized companies with a maximum of ten employees. They account for 81% of corporate insolvencies in the Creditreform statistics. However, the proportion of insolvencies in companies with more than 250 employees has risen at an above-average rate. This includes cases such as the insolvencies of travel provider FTI, and fashion retailer Esprit. „Although their share of the insolvency volume remains low, the consequences of major insolvencies are considerable: high debt defaults and job losses,“ notes Creditreform Managing Director Bernd Bütow.
The credit risk assessment firm expects around 320,000 jobs to be acutely threatened or even lost due to insolvencies in 2024. Last year, the figure was 205,000. According to the forecast, creditors of insolvent companies will have to reckon with losses totalling 56 billion euros in the current year, a significant increase compared to 2023 (31.2 billion euros) and the highest figure in the past five years.
All economic sectors affected
The increase in insolvency numbers is not limited to specific sectors, according to the Creditreform analysis. In manufacturing, construction, trade and the service sector, the insolvency figures forecast for 2024 are all higher than those of the previous year. „The insolvency figures rose in all economic sectors and exceeded the pre-corona level,“ the credit rating agency summarises. However the increase was particularly marked in the service sector, with a 27% rise in insolvencies. The highest insolvency rate was in the construction industry.
Young companies with less than two years in the market also suffered particularly badly in 2024. Creditreform recorded an increase of almost 40% in insolvencies among these start-ups compared to the previous year.
Energy costs weigh on companies
However, older companies that have been in existence for more than ten years also recorded an increase of more than 20% in insolvency cases. „In addition to the weak economy, structural problems are also making the situation more difficult,“ says Hantzsch. High costs, such as for energy and labour, are a burden. He is critical of the fact that companies are holding back on investments due to the uncertain situation.
Hantzsch expects that the difficult situation in the corporate landscape will also affect consumers, with some time lag. The number of consumer insolvencies rose by 8% in 2024, with 72,100 new proceedings registered. The increasing number of job losses will further exacerbate the situation in the coming years, the credit risk assessment firm expects.
