Germany’s insolvency rates have surged again in September, signaling persistent economic fragility and raising concerns about broader systemic risks. Data released Thursday by the Leibniz Institute for Economic Research Halle (IWH) reveals a concerning upward trend, with the number of personal and corporate insolvencies reaching 1,481 – a five percent increase from the previous month and significantly higher than levels observed in September 2023 and prior to the COVID-19 pandemic. The third quarter of 2025 narrowly missed the record set in the second quarter, marking the second-highest number of corporate failures in nearly two decades, exceeding even the aftermath of the 2009 global financial crisis.
The escalating crisis is particularly alarming given the impact on employment. Approximately 20,000 jobs were affected within the ten percent largest companies declaring insolvency last month alone. The total number of employees impacted saw a substantial increase, exceeding levels observed prior to the pandemic by a factor of four. This dramatic rise is partly attributable to the insolvency of the Schlau Group, owner of the Hammer retail chain, which triggered significant job losses.
The overall figures demonstrate a pattern of structural distress across German industries. While the industrial sector saw a slight decrease in insolvencies compared to the previous quarter, other key sectors including construction, trade and professional services, largely held their own. However, the majority of other major industries recorded new record highs, highlighting a widespread vulnerability. Regions particularly affected include North Rhine-Westphalia, Bavaria, Baden-Württemberg and Berlin. Comparing the current situation to the first quarter of 2020, prior to the full impact of the pandemic, insolvencies in the third quarter of 2025 have risen by a staggering 61 percent.
Steffen Müller, head of insolvency research at IWH, attributes the elevated insolvency rates to enduring macroeconomic pressures compounded by delayed consequences of historically low interest rates and extensive COVID-19 state aid. He cautiously suggests that the accelerating trend may be slowing, although further high insolvency numbers are anticipated in October. “This isn’t a sign of an improving economic landscape, but rather a depletion of the momentum behind these delayed effects” Müller cautioned. While acknowledging the inherent “painful market corrections” associated with widespread corporate failures, he suggests they may ultimately create space for more sustainable and future-proof businesses. However, critiques are emerging, questioning whether the scale of state aid in the pandemic effectively masked underlying structural weaknesses, potentially delaying necessary adjustments and exacerbating the current crisis. The long-term ramifications for Germany’s economic stability remain a significant area of concern, prompting calls for a critical evaluation of economic policies and stricter measures for safeguarding businesses going forward.
