Surge in Business Insolvencies Observed in July
Germany is currently grappling with an increase in corporate insolvencies, as evidenced by the Halle Institute for Economic Research (IWH) report that counted 1,588 insolvencies among individuals and capital companies in July 2025 [1][2]. This figure represents a 5.3% year-on-year increase in insolvencies in May, and a more substantial spike of 19.2% in July compared to the same month in the previous year [1][5].
This trend is the highest increase since October, and it appears to be linked to the ongoing effects of the COVID-19 pandemic. The economic crisis, marked by a two-year recession, has led to liquidity problems for many companies, while high energy costs have further strained businesses [1]. Sectors particularly affected include transport and warehouse logistics, construction, hotels, and manufacturing, which have seen a significant decline in output and an increase in non-performing loans [1][3].
The rise in insolvencies is negatively impacting the labor market. According to recent data, job losses are occurring as a result [5]. Despite the unemployment rate hovering around 6.2–6.4% in the first half of 2025, with only marginal improvements, the downturn in manufacturing and construction adds to the risk of further job losses [4].
In summary, the expected increase in corporate insolvencies in Germany in 2025 is driven by recession-related liquidity issues, high energy costs, and sectoral declines, particularly in transport, construction, and manufacturing. This trend is putting pressure on the labor market and is associated with job losses in affected firms [1][2][3][5].
It is important to note that the exact number of insolvency cases that will be processed by the insolvency courts and included in the official statistics is uncertain [2]. Additionally, the time of the insolvency application often lies approximately three months before the statistics are reported [2].
[1] Halle Institute for Economic Research (IWH). (2025). Monthly Report on Insolvencies. Retrieved from https://www.iwh-halle.de/en/research/institutes/iwh-halle/publications/monthly-report-on-insolvencies
[2] Federal Statistical Office of Germany. (2025). Insolvencies in Germany. Retrieved from https://www.destatis.de/EN/Themes/EconomyAndTransport/BusinessAndTrade/CompanyInsolvencies/CompanyInsolvencies-node.html
[3] German Banking Association. (2025). Non-Performing Loans in Germany. Retrieved from https://www.bankenverband.de/de/themen/marktentwicklungen/kreditrisiko/kreditrisiko-node.html
[4] Federal Employment Agency. (2025). Labour Market Report. Retrieved from https://www.arbeitsagentur.de/EN/Service/Statistics/Employment/EmploymentStatistics/EmploymentStatistics-node.html
[5] German Institute for Economic Research (DIW). (2025). Labour Market Report. Retrieved from https://www.diw.de/en/diw_01.c.395221.de/labour-market-report.html
Community policy should be implemented to address the rise in corporate insolvencies, with a focus on supporting affected businesses and re-skilling displaced workers through vocational training programs. The financial implications of this trend on the broader business community highlight the need for strategic investment and financial aid to prevent further insolvencies and stabilize the economy.
