A surge in corporate and personal bankruptcies has gripped Germany, reaching levels unseen in two decades, according to a recently released analysis by the Leibniz Institute for Economic Research Halle (IWH). The escalating crisis, particularly concerning given Germany’s reputation as an economic powerhouse, paints a concerning picture of underlying vulnerabilities within the nation’s industrial and commercial sectors.
December 2025 witnessed a concerning 1,519 insolvencies, representing a 17% increase from November, a 14% rise compared to December 2024 and a staggering 75% surge above the average for December between 2016 and 2019 – predating the COVID-19 pandemic. The annual tally for 2025 reached 17,604, exceeding even the figures recorded during the 2009 financial crisis, which were approximately 5% lower.
The widespread economic fallout has resulted in approximately 170,000 jobs being directly impacted by these insolvencies, signifying a considerable disruption to the German labor market. While Steffen Müller, head of the IWH’s insolvency research, acknowledges that some level of insolvency is a natural function of a market economy, facilitating necessary structural adjustments, he emphasizes that attributing the current crisis solely to lagged effects from the pandemic and previous low-interest rate policies is no longer tenable.
“The current high number of insolvencies increasingly reflects the ongoing economic challenges facing Germany” Müller stated, implicitly criticizing the government’s handling of recent economic headwinds, including rising energy costs and persistent inflation. Critics contend that delayed policy responses and a failure to adequately address supply chain bottlenecks have exacerbated the situation, pushing businesses to the brink.
Furthermore, the IWH’s early indicator system, designed to anticipate insolvency trends two to three months in advance, has consistently signaled escalating risk. These indicators suggest a persistent high rate of insolvencies is likely to continue well into the first quarter of 2026, raising serious questions about the government’s ability to effectively mitigate the ongoing crisis and what strategies will be deployed to stimulate economic resilience and safeguard future employment. The long-term implications for Germany’s economic leadership within Europe remain a subject of increasing scrutiny.
