According to Allianz Trade, major bankruptcies are increasingly threatening in Germany
Photo: Martin Schutt / dpa
It only sounds like good news at first glance: the number of corporate insolvencies in Western Europe continued to fall in the second year of the coronavirus.
At second glance, the figures from the Creditreform credit agency cannot hide the fact that the economic difficulties for many companies over the past two years have been enormous.
The main reason for this situation is the government support payments during the crisis.
Accordingly, the head of Creditreform's economic research, Patrik-Ludwig Hantzsch, also said about his company's study: "The longer government subsidies for companies last, the more likely it is that zombie companies will emerge that can only survive under these special conditions. « According to him, changes such as a turnaround in interest rates and the expiry of the aid measures could quickly put these companies in distress.
A (catch-up) wave of insolvencies would then become more likely.
More companies are making losses
So although in 2021 a total of 110,451 company bankruptcies were registered in the 14 Western European EU countries as well as Norway, Switzerland and Great Britain, more than five percent less than in the previous year, there is great concern.
In Switzerland, Greece, Great Britain, Finland, Italy and Denmark, for example, there has already been an increase in the number of insolvencies, Hantzsch reported.
According to the Creditreform experts, the key balance sheet figures of companies in Europe also registered the negative effects of the corona crisis.
An evaluation of the balance sheet figures of more than three million companies from the first year of the crisis, 2020, showed that the proportion of companies that made losses increased from 21.9 to 26.7 percent.
According to the experts, these companies in particular should represent the potential for insolvency in the coming years.
In view of this development, the credit insurer Allianz Trade also warns that the number of bankruptcies will increase again in the coming years.
Above all, more major bankruptcies must be expected in this country.
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, according to a recent study by the Allianz subsidiary.
“Companies shouldn't be fooled into thinking they're safe.
If it crashes, then really," said the Germany boss of Allianz Trade, Milo Bogaerts.
Four percent more bankruptcies expected
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," says Bogaerts.
“That means there were fewer bankruptcies, but there were particularly large ones.”
The total debt of all insolvent companies to their creditors rose by 10.5 percent to 48.1 billion euros in 2021 for the third year in a row - a new high since the all-time high of 73 billion euros in 2009.
Allianz Trade expects a moderate increase in corporate insolvencies by four percent to around 14,600 in the current year;
in the coming year, however, with an increase of ten percent to 16,130.
The extensive decoupling of insolvency events from the overall economic development is due not only to the financial supports but also to special rules in the obligation to file for insolvency, which should prevent a wave of bankruptcies.