The number of insolvencies for both sole proprietorships and corporations in Germany saw a surprisingly sharp increase in March. An analysis published by the Leibniz Institute for Economic Research Halle (IWH) on Thursday revealed that the first quarter of 2026 recorded as many business failures as has not been seen in over twenty years.
Specifically, the rate of insolvencies for these entities reached 1,716 in March. This represented a 17% rise compared to February, an 18% increase over March 2025, and a substantial jump of 71% above the average March observed between 2016 and 2019, which years predating the pandemic. In fact, the recent monthly number of insolvent sole proprietorships and corporations was even surpassed in June 2005. During March 2026, the highest recorded values were noted in the construction sector, trade, and other economic services. Furthermore, regional peaks (since 2020) were recorded in Bavaria, Baden-Württemberg, and North Rhine-Westphalia throughout March.
According to the IWH insolvency trend data, the largest ten percent of the insolvent businesses in March affected approximately 14,000 jobs. While this figure meant that affected employment was 40% lower than the previous month and 15% below the level of March 2025, it was still 77% higher than the average of a typical March from the pre-pandemic years of 2016 to 2019. This strong growth in the sheer number of insolvencies is attributed to a concentration of failures among smaller enterprises.
For the entire first quarter of 2026, Germany recorded 4,573 insolvencies for sole proprietorships and corporations. This marks the highest level since the third quarter of 2005, meaning the insolvency figures are higher than those observed during the major financial crisis of 2009. Overall, insolvencies impacted about 54,000 jobs, the highest figure since the third quarter of 2020 (a period that included major companies such as Esprit, Vapiano, and Wirecard). As was the case in preceding quarters, the manufacturing sector accounted for the largest share of affected jobs in the first quarter of 2026, with approximately 16,000 positions.
The IWH publishes early indicators that tend to precede insolvency activity by two to three months. These indicators have risen steadily in previous months, hitting unusually high levels in both February and March. Steffen Müller, head of the IWH’s insolvency research, stated that the indicators provided little room for optimism regarding the second quarter of 2026. He anticipates that insolvency figures will remain very high, noting that it is possible that the elevated levels seen in March could repeat themselves.
