Germany Faces Economic Struggles as Bankruptcy Cases Hit 20-Year High

Germany Faces Economic Challenges as Bankruptcy Cases Reach 20-Year High

A recent report has revealed that the number of corporate bankruptcies in Germany reached a 20-year high in 2025, highlighting the growing structural pressures on the German economy. According to data released by the Halle Institute for Economic Research (IWH), a leading economic research body in Germany, December 2025 saw a significant rise in bankruptcy filings, with 1,519 cases recorded during the month. This figure represents a 75% increase compared to the average monthly bankruptcy filings between 2016 and 2019.

On an annual basis, the total number of corporate bankruptcies in Germany for 2025 reached 17,604, marking the highest level since 2005. The report also indicated that approximately 170,000 jobs were affected by these bankruptcies throughout the year, further underscoring the severe impact on the labor market.

Stefan Müller, head of bankruptcy research at IWH, noted that the persistently high number of bankruptcies reflects the significant challenges currently facing the German economy. Notably, the increasing scale of these bankruptcies is having a profound effect on the job market. For instance, in December 2025 alone, the top 10% of bankruptcies by size led to the loss of approximately 15,000 jobs across Germany.

This trend suggests that the current wave of bankruptcies is no longer confined to small and medium-sized enterprises (SMEs). Instead, it has expanded to include larger corporations, indicating a broader economic downturn. The report highlights that the German economy has been experiencing contraction since 2023, with limited growth expected in 2025 and no significant recovery anticipated in 2026.

Several factors have contributed to this economic strain. High energy costs, coupled with the challenges of transitioning industries, have created a difficult environment for businesses. Additionally, external shocks such as increased U.S. tariffs have further squeezed profit margins, making it harder for companies to remain solvent.

The situation has raised concerns about the long-term health of the German economy, which has traditionally been robust due to its strong manufacturing sector and export-driven growth model. However, the current challenges suggest that structural reforms and policy interventions may be necessary to mitigate the ongoing economic pressures.