German Corporate Insolvencies Reach Two-Decade High in 2025 Amid Economic Challenges

Insolvency Figures Soar Across Germany

Corporate insolvencies in Germany reached their highest level in two decades in 2025, according to data from the Halle Institute for Economic Research (IWH). The institute reported a total of 17,604 insolvencies for the full year, a figure approximately 5% higher than during the global financial crisis in 2009. The IWH also noted a sharp increase in December 2025, with insolvencies standing 75% above the average level for the month in the pre-pandemic years of 2016 to 2019.

Separately, credit agency Creditreform reported an even higher total, with 23,900 German companies filing for insolvency in 2025. This represents an 8.3% increase from 2024 and marks the highest level since 2014. The Association of German Chambers of Industry and Commerce (DIHK) had anticipated around 22,000 bankruptcies for the year.

Economic Headwinds Drive Business Failures

Experts attribute the surge in insolvencies to a confluence of persistent economic challenges. Steffen Müller, head of insolvency research at the IWH, stated that the elevated levels can no longer be explained solely by 'knock-on effects from the pandemic or by monetary policy,' but rather reflect 'the current economic challenges facing Germany.'

Key contributing factors include:

• High energy costs and inflation
• Weak demand and lagging consumption
• Limited access to financing and difficulty obtaining new credit
• Structural crises in key sectors like automotive and mechanical engineering
• Increased bureaucracy and regulation
• Declining competitiveness and exports

Patrik-Ludwig Hantzsch, Head of Creditreform Economic Research, highlighted that many firms are 'highly indebted, struggling to access new credit while facing structural burdens.'

Widespread Impact Across Sectors and Workforce

The rise in insolvencies affected a broad spectrum of businesses, with micro-enterprises bearing a significant brunt. Companies with up to ten employees accounted for 81.6% of all insolvency cases, according to Creditreform. The services sector recorded the largest number of insolvencies, with approximately 14,000 cases, an 8.4% increase year-on-year. Manufacturing and trade also saw sharp increases, with cases rising by more than 10%.

A study by business consultancy Falkensteg revealed that bankruptcies among large companies (those with over €10 million in turnover) grew by about a quarter to 471 in 2025. Specific industries heavily impacted included metal goods manufacturers (65 cases), automotive suppliers (59 cases), and the electrical engineering sector, which saw a nearly 77% jump to 53 cases.

The economic consequences were substantial, with estimated bad debt losses from corporate insolvencies amounting to approximately €33.4 billion in the first half of 2025 alone. For the full year, Creditreform estimated the total financial fallout at around €57 billion. The human cost was also significant, with corporate bankruptcies impacting an estimated 285,000 employees throughout the year.

Cautious Outlook for 2026

The outlook for 2026 remains cautious, with no significant economic recovery expected in the near term. Creditreform's Patrik-Ludwig Hantzsch predicted that the 'number of bankruptcies will continue to rise until the end of the year.' The Falkensteg study suggested that large-scale insolvencies could increase by another 10% to 20% in 2026, particularly affecting the manufacturing industry. Experts warn that the German economy will likely recover slowly due to persistent structural issues, including a creeping loss of competitiveness, a shortage of skilled workers, excessive bureaucracy, and sluggish investment.