Germany set to witness a 19.2% surge in bankruptcies in July 2025, marking the steepest increase since October 2024
Germany Experiences Rise in Insolvencies Amid Economic Challenges
Germany is grappling with a surge in insolvencies, as revealed by the latest statistics. In May 2025, the total number of insolvencies (both corporate and consumer) reached 8,641, marking a 10.9 percent increase compared to the same month in 2024.
The transport and warehousing sector topped the list with the highest number of insolvencies per 10,000 companies, recording 10.9 cases. This was a 5.3 percent increase compared to May 2024. The construction sector followed closely with the second-highest number of insolvencies, totalling 1,214 cases.
Consumer insolvencies also saw a significant rise, with 6,605 cases in May 2025, an increase of 16.1 percent compared to the previous year. The retail trade sector reported the highest number of insolvencies among all sectors, with 1,303 cases.
The economic stagnation that began in late 2021 and lasted until the end of 2024 has been a significant factor in this increase. The erosion of payment behaviours and the increased financial difficulties across firms have contributed to the insolvency pressures.
Sector-specific declines have also played a role. The construction sector, for instance, has seen a substantial drop in activity, with new building permits falling nearly 50% compared to mid-2022. This underutilization and financial strain have contributed to the rise in insolvencies.
The manufacturing sector has also shown weakened output, with a 14% decrease since the end of 2017. This broader insolvency pressure has been felt across industries.
The transport sector, too, has experienced mixed trends. Business registrations rose significantly in Q2 2025, but insolvency data for July suggested an overall rise in corporate insolvencies, including transport-related firms.
The financial and credit sectors have also deteriorated. The ratio of non-performing loans (NPLs) increased sharply from 18.2% in Q4 2023 to 24.4% in Q4 2024, indicating growing credit stress. German banks are predicted to face asset quality pressures due to rising insolvencies.
The hospitality industry, while showing some signs of recovery, still faces challenges. Despite a rebound in bookings and turnover in 2025, the industry remains susceptible to shocks, as evidenced by the FTI tour operator insolvency in summer 2024.
In conclusion, the increase in insolvencies in these sectors in July 2025 is driven primarily by lingering economic stagnation, significant drops in sectoral activity (especially construction), deteriorating credit conditions, and mixed sectoral recovery dynamics, with transport and construction struggling more noticeably while hospitality shows some signs of recovery but remains susceptible to shocks.
The rise in insolvencies in Germany extends to various sectors, including finance and business, as the economic stagnation and deteriorating credit conditions have led to an increase in non-performing loans.
Moreover, the hospitality industry, while showing signs of recovery, still faces financial difficulties, as evidenced by the high ratio of non-performing loans and the susceptibility to shocks, such as the FTI tour operator insolvency in summer 2024.
