Escalating Bankruptcies Pose Concerns in Germany: Alarming Trends Unfolding
Germany is grappling with a surge in insolvencies, as economic pressures and structural challenges take a toll on businesses and households alike. The ongoing financial strain, exacerbated by rising living costs, high energy prices, and economic uncertainties, has contributed to the rise in consumer insolvencies, according to recent reports.
In 2024 and 2025, insolvencies in Germany increased notably, with key affected industries including construction, manufacturing, retail, hospitality, and wholesale and accommodation services. The construction sector, for instance, experienced a significant output decline, leading to massive underutilization of capacity and a rise in bankruptcies. The hospitality sector, meanwhile, faced dramatic revenue drops and rising insolvencies, driven by inflation on food and drink prices, VAT increases, and falling consumer demand.
The financial impact on creditors has been substantial. Insolvency applications increased 5.3% year-on-year as of May 2025, with creditor claims around €3.2 billion reported, indicating significant financial losses to creditors and heightened risk for banks. The ratio of deteriorated loans rose sharply from 18.2% in Q4 2023 to 24.4% in Q4 2024, one of the highest levels in Europe, signaling pressure on banks' asset quality from insolvencies.
The transport and warehousing sector, construction industry, and hospitality industry continue to have high rates of insolvencies per 10,000 companies. These sectors have been grappling with structural problems and pandemic-related aftereffects for years. In October 2024, the number of consumer insolvencies rose by 10.8% compared to the previous year, to 6,237 cases.
Despite government stimulus measures totaling €847 billion, these measures are seen as insufficient to address the underlying structural issues driving bankruptcies. High energy prices, increased material costs, and the economic aftermath of the pandemic are contributing to the pressure on many companies. The turn in interest rates is also affecting companies' liquidity, as loans have become more expensive.
As the economy continues to struggle under recessionary pressures and structural challenges, the insolvency landscape in Germany remains a cause for concern. The ongoing economic pressure on private households due to rising living costs and high energy prices is a significant factor in the rise in consumer insolvencies. The total number of regular insolvencies in Germany increased by 16.8% in 2024 compared to the previous year, according to the Federal Statistical Office (Destatis). The number of insolvency applications in December 2024 rose by 13.8% compared to the same month in the previous year.
In conclusion, Germany's insolvency landscape reflects an economy struggling under recessionary pressures and structural challenges, with broad sectoral impact and serious financial consequences for creditors and banks. The government's efforts to address the issue through stimulus measures have so far proven insufficient, and it remains to be seen how the situation will evolve in the coming months.
Other sectors, such as transport and warehousing, may also experience a rise in insolvencies, given their ongoing struggles with structural problems and pandemic-related aftereffects. The financial losses to creditors due to insolvencies in various industries, including construction, hospitality, and retail, have reached around €3.2 billion, posing a heightened risk for banks.
