Predicting Decrease in Business Collapses, Economists Positive on Entrepreneurial Market Resilience
Insolvencies in Germany Taking a Toll on Employment:
Halle - The Leibniz Institute for Economic Research Halle (IWH) has observed a decline in corporate insolvencies, following a peak in April, which was the highest level in two decades. There were 1,478 insolvencies of individuals and capital companies in Germany in May, reported IWH. Despite the 9% decrease from the previous month, the number of insolvencies remains 17% higher than in May 2024.
High insolvency numbers were particularly seen in the construction, retail, and manufacturing sectors in May. Steffen Müller, head of IWH insolvency research, predicts, "The leading indicators suggest a slight decrease in insolvencies for June." Alas, he expects more corporate bankruptcies in Germany compared to the previous year.
While there's a decline in company bankruptcies in May, IWH warns of increased employee sufferings. "In the largest 10 percent of insolvent companies in May, 15,000 jobs were affected," states IWH. The number of affected employees is 7% higher than the previous month, 27% higher than the level of May 2024, and even 130% higher than the May average of the pre-Corona years 2016 to 2019.
A Deeper Look:
Insolvencies in Germany have surged, with projections estimating over 24,000 bankruptcies in 2025 and potentially surpassing 25,000 in 2026. This represents an 11% increase compared to the previous year.
Large companies with annual revenues exceeding €50 million have contributed significantly to the insolvency crisis. 16 such companies declared bankruptcy in the first quarter of 2025, although this is a slight decrease from the same period in 2024, it doubles the number from 2023. These large companies are often part of the largest 10 percent of insolvent firms, causing significant employment disruption.
Over 210,000 jobs are at risk across Germany due to the ongoing insolvency crisis, with sectors like textiles, automotive, and healthcare being particularly affected.
Escalating costs, U.S. trade policies, and insufficient government support are the underlying causes contributing to the financial strain on large companies, leading to increased insolvencies.
Examples of companies facing insolvency include Meyer Burger, which filed for insolvency for its German subsidiaries in June 2025, and Thyssenkrupp AG, which is implementing significant job cuts as part of its restructuring efforts.
Overall, the insolvency crisis in Germany has led to a significant increase in job losses, particularly among large companies critical for employment stability.
- The increased number of insolvencies in Germany, particularly among large businesses, could lead to financial instability in the business sector.
- The ongoing insolvency crisis in Germany, impacting sectors such as textiles, automotive, and healthcare, poses a significant threat to employment stability, with over 210,000 jobs potentially at risk.
