Germany's Bankruptcies Expected to Increase by 25% to 30% in 2025, Hitting Record Highs

According to analysis by restructuring consultancy Falkensteg, Germany is expected to face a wave of severe bankruptcies in 2025, with the number of business closures likely to increase by 25% to 30% compared to 2024, reaching the highest level since the 2009 financial crisis. On January 9, 2025, the German Business Daily reported this forecast.

Multiple industries are facing heightened risks of bankruptcy and layoffs. The automotive supplier industry is particularly under scrutiny, as one-sixth of large bankruptcy cases in 2024 originated from this sector, primarily due to the challenges of transitioning to electric vehicles, declining automotive production, and weakened demand in major markets like China. Additionally, the mechanical engineering, construction, and healthcare industries have also suffered significant blows. For instance, bankruptcy cases in the mechanical engineering sector grew by 33% in 2024, while the construction industry saw a 53% surge in bankruptcies. The healthcare sector was also affected by labor shortages and rising costs, recording 23 large bankruptcy cases in 2024.

The employment outlook in Germany is equally bleak. The Federal Statistical Office of Germany predicts that bankruptcy cases will exceed 20,000 in 2024, while the Ifo Employment Barometer indicates widespread layoffs and hiring freezes across various industries. Klaus Wohlrabe, head of the Ifo survey, noted that fewer companies are increasing their workforce, while the proportion of companies planning layoffs is on the rise.

Germany's manufacturing sector, once the backbone of the European economy, is now facing multiple pressures. Dirk Andres, a bankruptcy administrator in Düsseldorf, believes that being too complacent for too long, along with outdated business models and increasingly fierce competition, are the main reasons for this situation.