War in Ukraine, delivery problems and rising prices: German companies are struggling with a number of problems. The unsettled situation could have devastating consequences, says credit insurer Allianz Trade.
Thanks to state aid, German companies have so far largely survived the corona crisis unscathed.
According to the assessment of the credit insurer Allianz Trade, the number of bankruptcies will increase again in the coming years and, above all, more major bankruptcies.
According to a study by the Allianz subsidiary, this trend is a consequence of a whole bundle of problems such as the war in Ukraine, the lockdowns in China, interrupted supply chains, supply bottlenecks, increased labor costs and prices, especially for energy and raw materials. Despite the recent steady decline in the number of cases, according to the credit insurer’s economists, there has been a trend towards larger insolvencies for several years.
«Companies should not be fooled into thinking they are safe. If it crashes, then really, »said the Germany boss of Allianz Trade, Milo Bogaerts. “Insolvencies in Germany fell for the twelfth time in a row in 2021 – but the indebtedness of insolvent companies and the resulting damage have risen to a record level,” said Bogaerts. “That means there were fewer bankruptcies, but particularly large ones.”
The total debt of all insolvent companies to their creditors rose by 10.5 percent to 48.1 billion euros for the third year in a row in 2021, a new high since the all-time high of 73 billion euros in 2009. “Even before that, the total debt increased rapidly: by 25.7 percent in 2019 and by 65.3 percent in 2020.”
Less companies threatened with bankruptcy
According to Allianz Trade (formerly Euler Hermes), the number of companies threatened with bankruptcy has nevertheless fallen. “Despite the many challenges, the finances of many German companies are currently very robust and thus their resilience,” said Bogaerts. “The proportion of endangered companies in Germany fell from seven to six percent in 2021 and state support measures continue.”
The economists at Allianz Trade are therefore anticipating a moderate increase in corporate insolvencies by 4 percent to around 14,600 in the current year; in the coming year, however, they expect an increase of 10 percent to 16,130. “Nevertheless, the number of cases at the end of 2023 should still be well below the pre-crisis level.” In connection with the state corona aid, however, they also speak of an “artificially low level” and a largely decoupling of insolvency events from overall economic development. In addition to various financial supports, there were also special rules regarding the obligation to file for insolvency during the pandemic, which were intended to prevent a wave of bankruptcies.