Insolvencies Across Western Europe Spike, Impacting Businesses Heavily
Business bankruptcies in the West of Europe have seen a substantial increase once more. - Business failures in Western Europe have risen once more.
Taken aback by the rise in business failures, Patrik-Ludwig Hantzsch, head of Creditreform Economic Research, asserted how a trio of economic sluggishness and fallout has engulfed Europe, with a significantly heightened competition to blame for a sharp escalation in insolvencies across Western Europe. Far from mere catch-up effects from the corona pandemic, Hantzsch underscored the gravity of the situation.
Over fifteen Western European countries surveyed reported an increase in insolvencies. Just two - Denmark and the UK - experienced a decrease. A notable surge was observed in Ireland, Greece, and the Netherlands, with Germany registering a 22.5% rise and France following suit at 17.4%. The construction industry bore the brunt of this economic turmoil, revealing a 15.4% increase in insolvencies due to mounting costs, high borrowing rates, and a weakened customer demand.
Similarly, a majority of Central and Eastern European countries witnessed an increase in corporate insolvencies, with Poland, Latvia, Slovenia, Lithuania, and Estonia registering an uptick. While Hungary had seen a dramatic rise in 2022 and 2023, a sharp decline was reported recently, altering the overall outlook.
Even the United States was not immune, with the number of insolvencies increasing by 16.6%. Despite moderately positive economic growth, high interest rates and dwindling consumer spending continued to weigh on companies, albeit remaining below pre-pandemic levels of 2018 and 2019.
- Insolvencies in Western Europe
- Competition Intensification
- Creditreform
- Construction Industry
- Company Bankruptcies
- Economic Downturn
- European Markets
- Business Failures
- Macroeconomic Factors
- SMEs (Small and Medium Enterprises)
Insight: Economic uncertainty, surging costs, post-pandemic operational challenges, and a shift towards e-commerce competition have contributed to the rising insolvency rates observed in Western Europe[5]. Small and mid-sized enterprises have experienced a disproportionate number of failures, despite regulatory measures to support these businesses[6]. The sectors most adversely affected include construction, courier services, gastronomy, and traditional retail, while technology startups and others face funding constraints and high interest rates[7]. The cultural and legal context in Western Europe influences how insolvencies are managed and reported, often emphasizing personal responsibility and financial prudence[8]. A complex network of macroeconomic, sectoral, and cultural factors underpins the prevalence of insolvencies in Western Europe, with Germany experiencing a particularly sharp rise. The outlook remains uncertain as economic volatility, inflation, and sector-specific challenges persist[5][6][9].
- The sharp increase in insolvencies across Western Europe is being highlighted by Patrik-Ludwig Hantzsch, the head of Creditreform Economic Research.
- The economic sluggishness and fallout seen in Europe have intensified competition, leading to a significant jump in corporate insolvencies in multiple Western European countries.
- Among the sectors hit hardest by this economic downturn in Western Europe is the construction industry, which has registered a 15.4% increase in insolvencies due to rising costs, high borrowing rates, and weakened customer demand.
- The rise in business failures in Western Europe goes beyond mere catch-up effects from the coronavirus pandemic, as underscored by Hantzsch.
