The German economy is in the midst of a wave of insolvencies. More and more companies are sliding into crisis, while at the same time, business closures are on the rise. This dramatic development demonstrates that the stability of many sectors is at risk. (creditreform: 09.09.25)
Wave of insolvencies hits companies with full force
According to the Federal Statistical Office, the number of regular insolvencies rose by almost a fifth in July 2025 compared to the same month last year. This wave of insolvencies thus reached one of its highest levels in two decades. The Leibniz Institute for Economic Research Halle also confirmed this alarming development.
In the first half of 2025, Creditreform registered 11,900 corporate bankruptcies. The previous year, there were 10,880 cases, an increase of 9.4 percent. In 2024, the increase had already reached 28.5 percent. The momentum is thus continuing to increase, signaling a deeper structural crisis.
Corporate bankruptcies as a symptom of structural problems
Economists had long attributed the increase to catch-up effects. But rising key interest rates, expiring coronavirus aid, and postponed financial difficulties are no longer sufficient explanations. “This can no longer be explained by catch-up effects,” said an expert from the Institute of Economic Research (IWH) in the Frankfurter Allgemeine Zeitung.
Two years of recession have eroded liquidity. Volker Treier, chief analyst at the German Chamber of Industry and Commerce, warned back in June: “Now 43 percent of companies rate their financial situation as problematic.” Corporate bankruptcies are therefore more than an economic problem – they reflect profound structural weaknesses.
Business closures are rising sharply
Alongside the wave of insolvencies, the number of business closures is also increasing rapidly. A study by Creditreform and the Center for European Economic Research showed that over 196,000 companies closed in 2024. This represents an increase of 16 percent and marks the highest number since 2011.
Technology-intensive service providers are particularly affected. Industries such as IT, environmental technology, diagnostics, and product development are considered future sectors, but the number of closures in these sectors climbed by 24 percent. As a result, Germany is not only losing jobs but also important expertise. Corporate bankruptcies and business closures are now affecting the entire economy.
Economic crisis with uncertain prospects
The wave of insolvencies is further exacerbated by rising costs for energy, bureaucracy, and personnel. Many companies have barely any reserves left, loans are expiring, and new financing is not forthcoming. In this climate, the economic crisis is intensifying, endangering even solid businesses.
The KfW Economic Compass does offer some hope. The bank forecasts growth of 0.2 percent for 2025 and even 1.5 percent for 2026. However, it remains unclear whether these prospects are sufficient to overcome the economic crisis. The wave of insolvencies and corporate bankruptcies demonstrate that the German economy is facing one of its greatest tests in decades.