sueddeutsche.de
German Insolvencies Surge to 15-Year High
German business insolvencies hit a 15-year high in Q4 2024, with 4215 companies and nearly 38,000 jobs affected, exceeding levels last seen after the 2009 financial crisis due to the lagged effects of low interest rates and pandemic subsidies.
- What is the overall impact of the recent surge in German business insolvencies on the national economy and employment?
- German business insolvencies reached a 15-year high at the end of 2024, mirroring levels last seen during the 2009 financial crisis. In Q4 2024, 4215 companies went bankrupt, affecting almost 38,000 jobs, according to the Halle Institute for Economic Research (IWH). This surge follows years of low interest rates and pandemic subsidies that masked underlying economic weaknesses.
- What factors beyond the current economic downturn contributed to the significant increase in insolvencies observed in late 2024?
- The IWH attributes the rise in insolvencies partly to the current economic crisis and increased energy and labor costs. However, they emphasize that low interest rates and pandemic support measures (like Kurzarbeit) artificially suppressed insolvencies for years. The subsequent increase in interest rates and withdrawal of these subsidies caused a delayed effect in 2022 and beyond.
- What are the potential long-term consequences of this wave of business failures for the German economy and its industrial landscape?
- While painful, the IWH views the high number of business failures as a necessary market correction, clearing the way for more sustainable companies. Although recent insolvency indicators slightly decreased in December, they remain elevated, suggesting a modest increase in bankruptcies from February 2025 onwards. This trend reflects underlying economic restructuring.
Cognitive Concepts
Framing Bias
The headline (not provided, but inferred from the text) and introductory paragraph likely emphasize the severity of the increase in bankruptcies, potentially framing the situation in a more negative light than a more balanced presentation would. The inclusion of the comparison to the 2009 financial crisis also serves to amplify the sense of alarm. The expert quote emphasizing the necessary nature of the market correction further reinforces a specific viewpoint.
Language Bias
The language used is generally neutral. However, terms like "painful" and "necessary market correction" carry a certain implicit value judgment. More neutral language could include phrases such as 'significant increase' instead of 'painful' and 'market adjustment' instead of 'necessary market correction'.
Bias by Omission
The article focuses primarily on the increase in bankruptcies without exploring potential mitigating factors or positive economic trends that might counterbalance the negative data. While acknowledging some contributing factors (rising energy and labor costs, the end of subsidies), a more comprehensive analysis would include perspectives from businesses that have successfully navigated these challenges or sectors showing resilience.
False Dichotomy
The article presents a somewhat simplistic view of the situation, framing the rise in bankruptcies as a necessary 'market correction' without fully exploring the societal impact of job losses and economic hardship for individuals and communities affected. The analysis doesn't thoroughly consider alternative interpretations or approaches to managing economic downturns.
Sustainable Development Goals
The article reports a significant increase in business insolvencies in Germany, leading to job losses and negatively impacting economic growth. The high number of insolvencies reflects negatively on the health of the German economy and the stability of employment. The fact that the increase is partially attributed to the withdrawal of pandemic-era subsidies further highlights the link to economic stability and job security.