Institute IWH expects more bankruptcies in autumn

Dhe number of bankruptcies of partnerships and corporations in Germany has risen sharply. It was 718 in August and thus a good quarter (26 percent) above the previous year’s value, as the Leibniz Institute for Economic Research Halle (IWH) announced on Tuesday. According to the IWH, the value is above the estimates of the economic experts from the previous month.

In view of the current figures, the IWH revised its forecasts for the coming months upwards. For October, the leading indicators already indicated significantly higher insolvency figures, which could be around a third higher than in October 2021. “Despite the rising numbers, there is currently no talk of an impending wave of insolvencies,” added Steffen Müller, head of the IWH structural change department, on Tuesday.

“After a long period of low insolvency figures, a trend reversal has now set in,” says Müller. This is due in particular to the sharp rise in prices for important production factors. While the Ukraine war is leading to rising energy costs, disruptions in international supply chains are responsible for the rise in the price of many imported intermediate goods. In addition, the turnaround in interest rates announced by the European Central Bank (ECB) will increase companies’ refinancing costs. The increase in the minimum wage puts an additional strain on companies’ finances.

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