Germany facing a wave of corporate bankruptcies in 2020? The experts at creditreform do not see it quite so dramatically so far.
However, for the first time since the crisis year of 2009, the credit agency expects a rise in corporate insolvencies next year.
"The years-long downturn in corporate insolvencies has de facto come to an end," noted creditreform chief executive volker ulbricht. "The economic downturn in germany is increasingly reflected in the insolvency statistics."
For the coming year, creditreform expects 19.800 company bankruptcies in europe's rough economy. That would be a trend reversal: since 2009 (32.930 case), the numbers have fallen steadily, since the peak in 2003 with 39.470 company bankruptcies have halved the number of cases in germany.
By the end of the current year, creditreform estimates 19.400 companies in this country have gone to the insolvency court. That was almost as many as in 2018 (19.410 trap).
The downward trend in consumer insolvencies that began in 2010 continued, albeit less markedly: 65,700 private individuals went bankrupt in 2019, 3.0 percent fewer than in the previous year (67 percent).740). Thanks to the still good situation on the labor market, creditreform expects a further decline to 64% in 2020.000 trap.
Number of corporate insolvencies remains at lowest level in 25 years. But perhaps the peace and quiet will carry the day. According to an analysis by the information service provider crifburgel, more than 310,000 companies in germany are entering 2020 with financial problems. Many companies had "built up a buffer against crises" in recent years, explained crifburgel managing director ingrid riehl. "This resistance, however, is beginning to crumble."
Trade conflicts and the brexit drama burden exporters, upheavals in the automotive industry also challenge their suppliers. "Added to this is the increasing number of gross insolvencies in 2019. In many cases, domino effects cause insolvent companies to drag other companies into insolvency with them," analyzed riehl.
The credit insurance company euler hermes had already pointed out on the basis of figures for the first nine months of 2019 that in the current year, well-known and major companies were increasingly affected by insolvencies: among others, the fashion company gerry weber, the airline germania and the wind turbine company senvion. The bankruptcy of the thomas cook travel group has caused quite a stir in recent weeks. Official insolvency figures for the whole of 2019 will be published by the federal statistical office in march.
The vast majority of companies die in obscurity: in four out of five cases (81.7 percent), companies that slide into bankruptcy have a maximum of five employees, according to creditreform. The risk of bankruptcy is particularly high in the case of removal transports, bars and security services.
Every single company failure – no matter how small – hits employees and believers hard. According to creditreform, the total number of bankruptcies this year is around 218.000 jobs on the brink or already lost – around 20.000 more than a year before.
Craftsmen, suppliers, lenders often have to do without at least part of their money. Creditreform estimates insolvency losses in the current year at a total of 23.5 billion euros – also more than in 2018 (20.1 billion euros).
Experts are concerned about two trends: first, low interest rates and favorable financing conditions have kept a number of companies alive in recent years that in normal times would have been more likely to go bust. On the other hand, according to creditreform figures, there was a noticeable increase in insolvencies in the manufacturing sector in 2019 (plus 6.6 percent) – so the current weakness of industry is having an impact.
"The companies are coming out of a long period of sunshine, have eaten some bacon, which prevents the worst," says creditreform chief executive ulbricht. "It's not as if we had a dramatic upheaval. We have a symptomatology that indicates that the sky is no longer blue, but that it has become cloudy. And sporadic rain and lightning strikes here and there."