German Business Insolvencies Surge 19.2% in July 2024

German Business Insolvencies Surge 19.2% in July 2024

sueddeutsche.de

German Business Insolvencies Surge 19.2% in July 2024

German business insolvencies rose 19.2% year-on-year in July 2024, the highest increase since October 2024, due to the ongoing economic crisis, high energy costs, and the delayed impact of low interest rates and pandemic aid withdrawal; May saw 2036 insolvencies (up 5.3%), with creditors owed roughly €3.2 billion, and consumer insolvencies increased by 16.1% to 6605.

German
Germany
EconomyLabour MarketInflationGerman EconomyEconomic CrisisEnergy PricesInsolvencies
Statistisches BundesamtDeutsche Industrie- Und Handelskammer (Dihk)Leibniz-Institut Für Wirtschaftsforschung Halle (Iwh)Berufsverband Der Insolvenzverwalter Und Sachwalter Deutschlands (Vid)
Jupp ZenzenChristoph Niering
What are the long-term implications of this insolvency trend for the German economy, and which sectors are most at risk of further decline?
The sharp rise in insolvencies highlights the vulnerability of German businesses following years of artificially low interest rates and pandemic support. The current economic climate, coupled with high energy costs, exposes the structural weaknesses of many companies, with sectors like transportation, construction, and hospitality being disproportionately affected. This trend suggests a prolonged period of economic instability and potential further job losses.
What is the significance of the 19.2% year-on-year increase in German business insolvencies in July 2024, and what are the immediate consequences?
In July 2024, German business insolvencies surged 19.2% year-on-year, the highest increase since October 2024. This rise, based on preliminary data from Insolvenzbekanntmachungen.de, signals a continuation of the economic crisis impacting business liquidity after two years of recession. High energy costs are a significant contributing factor.
How have factors like historically low interest rates, government pandemic aid, and high energy costs contributed to the current surge in bankruptcies?
The increase in insolvencies reflects a confluence of factors beyond the current economic downturn. Extremely low interest rates masked underlying weaknesses for years, while government pandemic aid kept afloat businesses that were already fragile. The subsequent rise in interest rates and withdrawal of support have led to a surge in bankruptcies since mid-2022.

Cognitive Concepts

3/5

Framing Bias

The headline and introduction immediately emphasize the significant increase in company insolvencies, setting a negative tone. While the article presents some counterpoints, the overall framing leans toward highlighting the problem rather than offering balanced perspectives or solutions. The use of terms like "Welle der Unternehmensinsolvenzen" (wave of company insolvencies) further strengthens this negative framing.

1/5

Language Bias

The language used is generally neutral, although the choice of words like "Welle der Unternehmensinsolvenzen" (wave of company insolvencies) could be considered slightly dramatic. However, this is more a stylistic choice than an instance of loaded language. The use of direct quotes from experts adds objectivity.

3/5

Bias by Omission

The article focuses primarily on the increase in company insolvencies in Germany, but omits discussion of potential government responses or future economic forecasts. While acknowledging that some companies were kept afloat by state aid during the pandemic, a deeper analysis of the government's role in both the current situation and potential solutions is missing. Furthermore, the article doesn't explore the specific challenges facing different industries in detail beyond mentioning transportation, construction, and hospitality. It lacks a broader perspective on the societal impacts of these insolvencies.

2/5

False Dichotomy

The article presents a somewhat simplistic view of the causes, attributing the rise in insolvencies solely to high energy costs and low interest rates in previous years. While these factors are undoubtedly significant, the narrative omits other potential contributing factors, such as global economic conditions, supply chain disruptions, or changes in consumer behavior. There is no nuanced discussion of the multiple interconnected elements involved.

Sustainable Development Goals

Decent Work and Economic Growth Negative
Direct Relevance

The article reports a significant rise in company insolvencies in Germany, indicating a decline in economic activity and impacting employment. The increase is attributed to various factors including high energy costs, economic recession, and the withdrawal of government support measures. This directly affects decent work and economic growth, leading to job losses and reduced economic output.