The news from the German business sector is negative according to data published by the economic newspaper Handelsblatt and analyzed today by the German media. A total of around 11,000 company bankruptcies were recorded in the first half of 2024.

In particular, more than 160 companies with a turnover of more than 10 million euros declared bankruptcy, among them famous names such as the historic German department stores Galeria Kaufhof, the tourist group FTI Touristik or even the well-known clothing group Esprit.

This is a rapid increase in bankruptcies of 40% compared to the previous year and a negative record for a decade. As Bild observes, of the 279 companies that had been put into liquidation in 2023, only 35% could finally be saved within the first half of 2024.

Systemic problem dimensions

The sectors facing the strongest pressures, as a result of which many companies cannot cope with their current obligations, are the construction sector, the sector of the sale of cars and parts as well as the sector of machinery manufacturing.

As Focus magazine observes, the fact that bankruptcies are now spread across a wide range of different industries demonstrates that this is a global phenomenon of the German economy, which takes on systemic dimensions.

And it may be the bankruptcies of groups with big names, such as the Galeria Kaufhoh or Esprit groups, that attract the public eye, but what worries experts the most are the bankruptcies of companies related to heavy German industry: from the automotive industry to the raw materials industry materials and of course constructions and real estate.

Combination of factors with long-term impact

According to the analysis of the economic survey Handelsblatt, many German companies have not yet managed to recover from the consequences of the pandemic, the high inflation of the past years and the increase in the prices of energy and raw materials.

To these is added the general decline in the competitiveness of the German economy at the international level, the continuing lack of labor force in many sectors, but also serious bureaucratic obstacles.

Also, as economists and other experts point out, the legal framework for the restructuring of companies after liquidation or for saving jobs is complicated in Germany. An additional difficulty factor is the attraction of investors who are willing to fully or partially acquire insolvent or troubled companies, despite the protection framework offered by German law.

However, even the forecasts of economists for the path of growth in Germany are not favorable for attracting investors, which is weak, hovering just above 0% and already lagging behind other Eurozone countries.