One in ten German companies face insolvency risk from energy crisis – analysis

Ten percent of German companies are currently at increased risk of insolvency due to the effects of the energy crisis and supply chain problems, according to an analysis by credit information provider CRIF, which forecasts that insolvencies will rise this year and next. "High energy costs, existing problems in supply chains and inflation are causing problems for many companies,” said CRIF Germany managing director Frank Schlein. “Added to this is the reluctance to spend among consumers, who have less money available due to high energy prices and inflation.” Energy-intensive sectors in particular are at risk, CRIF said. “In addition to the much-cited bakeries, this also includes the ceramics and glass industry, paper manufacturers or the transport and logistics industry.” Many companies specialising in skilled crafts and trades, the catering industry, beverage production, and hairdressing salons are also experiencing problems, according to the report.

CRIF expects that insolvencies will increase slightly this year, before rising substantially in 2023. It forecast 14,500 company insolvencies in 2022, an increase of almost four percent, and 17,000 in 2023, a 17 percent rise. For the analysis, CRIF examined the creditworthiness or financial strength of almost 3 million companies. It found that more than 300,000 are currently experiencing financial problems, an increase of almost 16 percent compared to March.

The German government has passed a series of relief measures for consumers and businesses to cushion the blow from rising energy cost in the wake of Russia's war in Ukraine, which also drove overall inflation to multi-decade highs.