Record-breaking Bankruptcies Reach a 10-Year High
In the first half of the year, Bavaria has witnessed a significant increase in company insolvencies, particularly in the manufacturing industry, processing trade, and hospitality sector. This surge can be attributed to ongoing economic and structural challenges, including slow government reforms, shifting international production, and rising costs.
Key factors contributing to this trend include the slow progress in tax incentive reforms and government support. Bavarian and German production industries, including film production, have expressed concerns over the slow pace of reforms essential for maintaining competitive production hubs. This weak policy environment discourages investment and growth, leading to company failures.
International production shifts have also played a role in some manufacturing and production service companies going bankrupt. As production relocates outside Germany to countries with more favourable conditions, local industries are impacted.
The hospitality industry, both in Bavaria and southern Europe, faces strains from rapidly rising rents and costs amid increasing tourist numbers. Economic pressures and cost inflation can undermine profitability and increase insolvencies.
The total number of insolvencies in the manufacturing industry or processing trade reached 140 in the first half of the year, while the hospitality industry saw 192 new insolvency proceedings, a 31 percent increase from the previous half year. The number of self-employed persons facing insolvency was 1,705, and the total number of employees affected by these insolvencies was 14,109.
The total number of insolvencies rose to 7,340, the highest level since the second half of 2015. This represents an 8 percent increase in consumer insolvencies and a 7.7 percent increase compared to the previous six months, resulting in a total of 7,340 proceedings.
Despite this rise, it's important to note that the increase does not specifically apply to the manufacturing industry, processing trade, or the hospitality industry, as these sectors were previously mentioned. Furthermore, the total number of insolvencies does not include insolvencies in these industries.
This surge in insolvencies has pushed the number of insolvencies in Bavaria to a ten-year high, with a total of 1,671 companies filing for insolvency in the first half of the year. As the situation continues to evolve, it's crucial for policymakers to address these challenges and support affected industries to ensure a stable and prosperous economy.
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- The slow progress in tax incentive reforms and government support significantly contributes to the Economic and social policy matters that are causing company failures in the manufacturing industry and other sectors in Bavaria.
- The rise in insolvencies in the industry, finance, and hospitality sectors of Bavaria can be linked to international production shifts, which are impacting local production industries and straining the hospitality industry with increasing costs.
