Business Insolvencies in Germany Reach Highest Level Since 2014 Amid Economic Pressures

Business insolvencies in Germany have surged in 2025 to their highest level since 2014, reflecting ongoing economic challenges, especially for the country’s Mittelstand and key industrial sectors. After a steep 25% rise in insolvencies in 2023 and 2024 following the end of pandemic-related government aid, the trend continues but with a moderating pace this year.

According to Creditreform Wirtschaftsforschung, many companies remain heavily indebted and are struggling to obtain new credit, compounded by structural burdens such as elevated energy prices and strict regulations. The Mittelstand, a cornerstone of Germany's economy, is under significant pressure, facing a precarious financial situation.

Sector-specific data reveals notable rises in insolvencies: the manufacturing industry increased by 10.3%, the trade sector by 10.4%, and the services sector experienced an 8.4% rise. The construction industry saw a more moderate 4.7% uptick. These figures place insolvency cases in these sectors about one-third above pre-pandemic levels from 2019.

Creditworthiness assessments show deteriorating conditions across various industries, particularly in healthcare and social services where rising operational costs and bureaucratic hurdles weigh heavily. Conversely, the mining sector maintains relatively strong credit standing, while the hospitality industry remains weak, still grappling with fallout from the pandemic.

Bernd Bütow, Chief Executive of Creditreform, highlighted the growing economic strain: "High costs and bureaucracy are significantly undermining Germany’s competitiveness, alongside persistent economic weaknesses." He noted the government’s planned billion-euro investments in infrastructure and defense aiming to stimulate growth through 2026. However, Bütow stressed that additional structural reforms, including relief on electricity costs, are crucial to stabilizing the economic foundation.

Patrik-Ludwig Hantzsch, head of Creditreform Wirtschaftsforschung, expressed cautious optimism about a potential turning point by 2026 but emphasized the continued fragile environment many businesses face.

The escalating insolvency rates underline the urgent need for strategic government support and reforms to help German companies navigate ongoing financial and structural challenges and to safeguard economic stability in the near term.