Record-High Insolvencies Hit German Businesses in 2025, Driving Industry Struggles

In 2025, Germany experienced its highest number of company insolvencies in two decades, totaling 17,604 cases according to the Leibniz Institute for Economic Research Halle (IWH). On average, 48 businesses filed for insolvency daily, with December alone seeing 1,519 filings—a 75% increase compared to pre-pandemic December averages. Key sectors severely impacted include hospitality, construction, and real estate.

Large firms have not been spared; 471 companies with annual revenues exceeding 10 million euros declared insolvency, marking a 25% rise year-over-year. Since 2021, major insolvencies have nearly tripled. Economic pressures such as soaring interest rates since late 2022, escalating costs for energy, raw materials, labor, and competition from low-cost imports have strained companies across Germany. Expert Jonas Eckhardt describes the situation for many medium-sized enterprises as a "survival question," with no expected easing in 2026.

Adding to economic challenges, German driving schools face collapse amid reforms aimed at reducing the prohibitively high 4,500-euro cost of obtaining a driver's license. Uncertainty over new pricing policies has led to a dramatic drop in learner registrations, with some schools reporting decreases up to 70%. Driving instructors warn that this "historical collapse" threatens many family-run businesses, as students delay enrolling in hopes of lower fees. Proposed changes include more online theoretical courses and driving simulators, but instructors express skepticism over their effectiveness and cost.

These developments paint a picture of widespread financial strain across German industries, with businesses large and small navigating a tough economic climate marked by rising costs and shifting regulatory environments.