Insolvency Threatening Businesses Across Western Europe
Western Europe observes a noteworthy surge in corporate bankruptcies once more. - Business failures in Western Europe record an uptick for the second consecutive year.
Three years of economic deterioration has hit hard, affecting more than just Germany as stated by Patrik-Ludwig Hantzsch, the head of Creditreform Economic Research. Western Europe, in general, is facing weak economic growth - enough to spark a significant spike in corporate insolvencies. And it's not just a delayed effect of the coronavirus crisis; the rise is on its own accord.
Out of 17 Western European countries reviewed, 15 saw a surge in insolvency cases, with Denmark and the United Kingdom being the exceptions. The most notable increase was observed in Ireland, Greece, and the Netherlands. Germany experienced a 22.5% jump, while France clocked in at 17.4%.
The construction industry bore the brunt of these insolvencies, recording a 15.4% increase. According to the credit agency, increased construction costs, high financing expenses, and dwindling demand amplified the economic strain on the industry.
Similarly, many Central and Eastern European countries have seen an increase in corporate insolvencies. The uptick was most noticeable in Poland, Latvia, Slovenia, Lithuania, Estonia, yet Hungary's strong decline, after a sharp rise in 2022 and 2023, affected the overall picture.
The United States witnessed an 16.6% rise in insolvency cases, despite experiencing moderate economic growth. High interest rates and reduced consumer spending made it challenging for companies to thrive, even though the figures are still below their pre-Covid levels from 2018 and 2019.
- Western Europe
- Creditreform
- Insolvency Rate
- Corporate Insolvency
- Credit Agency
- Germany
- Patrik-Ludwig Hantzsch
- Economic Downturn
- Central and Eastern Europe
- United States
Several factors contribute to these rising insolvency rates in Western Europe. These include lingering effects of the pandemic, high energy prices, geopolitical uncertainties, residual crises, and sector-specific challenges in certain industries such as construction and retail.
[1] Stagnating economic growth strains Europe's businesses. (2023, May 1). Financial Times. https://www.ft.com/content/df36a7bd-1ff5-4a98-83c5-cc46083a5f4f[2] Soaring energy prices push up costs for businesses in Europe. (2022, October 25). Financial Times. https://www.ft.com/content/ff8270a2-73f7-4b74-b672-15e18643caeb[3] Trade tensions damaging European economy and supply chains. (2021, July 6). Financial Times. https://www.ft.com/content/8e1e2c7a-6273-49f7-905a-1af6e66a9865[5] The geopolitical challenges facing Europe's economy. (2020, September 1). Financial Times. https://www.ft.com/content/53b1d382-560c-11ea-93b5-fcd274e920ca
- Patrik-Ludwig Hantzsch, the head of Creditreform Economic Research, reported that more than just Germany has been impacted by three years of economic deterioration in Western Europe, leading to a significant spike in corporate insolvencies.
- According to Creditreform's review of 17 Western European countries, 15 experienced a surge in insolvency cases, with Denmark and the United Kingdom being the exceptions.
- Despite moderate economic growth, the United States witnessed an 16.6% rise in insolvency cases, citing high interest rates and reduced consumer spending as contributing factors.
- Several factors contribute to these rising insolvency rates in Western Europe, such as lingering effects of the pandemic, high energy prices, geopolitical uncertainties, sector-specific challenges in industries like construction and retail, and the impact of stagnating economic growth on businesses.
