Germany’s corporate insolvency rates experienced a notable decline in November, offering a momentary reprieve from a protracted period of economic strain, though experts caution against interpreting the data as indicative of a lasting recovery. According to an analysis released by the Leibniz Institute for Economic Research Halle (IWH), the number of bankruptcies among both partnerships and corporations now sits below that of the corresponding month in the previous year – a first in three and a half years.
The IWH’s Insolvency Trend report indicates 1,293 corporate insolvencies were registered in November, representing a 17% decrease from October and a 3% drop year-on-year. However, these figures remain significantly elevated when compared to pre-pandemic norms, still 46% higher than the average November figures observed between 2016 and 2019.
The most concerning aspect remains the immediate impact on employment. In November, approximately 9,000 jobs were affected within the largest 10% of insolvent companies. While a substantial 30% reduction in job losses was observed compared to October and a 25% drop compared to the equivalent month last year, the number remains 26% above the pre-pandemic average. The decline in industrial jobs, reaching levels seen just prior to the pandemic, suggests specific sectors continue to grapple with vulnerabilities.
“Our indicators suggest continued subdued insolvency activity for December” stated Steffen Müller, head of the IWH’s insolvency research. “However, we anticipate renewed figures in January and February”. Müller’s assessment highlights a cautious perspective, underlining that the November dip is likely a temporary stabilization rather than a fundamental shift in the economic landscape. He warned against premature declarations of success, suggesting the trajectory points towards stabilization at a high level of insolvency rates, rather than a genuine lifting of economic concerns. The data prompts critical questions about the long-term sustainability of German businesses and the effectiveness of government interventions aimed at mitigating the ongoing economic pressures.
