The number of German companies going bankrupt continues to grow. Last year also saw the sharpest increase since the 2008 credit crisis, according to research by credit insurer Allianz, and that could also spell bad news for the Netherlands.
According to ING Germany’s chief economist, Carsten Brzeski, the high number of bankruptcies is mainly due to the fact that German consumption has fallen sharply. He argues that companies couldn’t actually go bankrupt during the corona pandemic, but the protection has now expired. “Furthermore, companies that have had problems due to the lockdowns are now being hit very hard by inflation and high energy prices.”
And therefore there are recovery failures and a serious situation, thinks Brzeski. According to him, it shows that the energy crisis is weighing heavily on the German economy. German economists have wondered more than once in recent months how bad the crisis is and whether a recession will follow, “and now we’ve seen that the German economy contracted in the fourth quarter,” Brzeski said. A particularly visible contraction in the catering sector, in small shops and, for example, in hairdressers.
No fear
But, he stresses, the Germans aren’t panicking yet. According to Brzeski, Germans have gotten used to such failures in recent years. However, he expects this to make people think. “Making people wonder if it’s a recovery effect of the pandemic or if it’s really the beginning of longer economic damage.”
An economic damage that will not only be felt in Germany, but which, according to Brzeski, will worsen in many European countries. The Netherlands too. He says that there are enough companies in Europe that have not gone bankrupt due to the corona measures, but are now experiencing major problems. “That adds to the problems of high energy prices,” he continues.
Netherlands
It is difficult for Brzeski to say how big the problems will be for the Netherlands. He thinks the initial effect is not too negative, because bankruptcies are currently occurring mainly in the German restaurant sector and small shops. “If it’s mainly about consumption, the Netherlands won’t be hit so hard.”
However, Brzeski cautions that the same phenomenon can actually occur in the Netherlands. The Netherlands would only be hit hardest if large German companies went bankrupt. ‘Industrial companies, for example, but that wasn’t to be expected,’ he concludes. “If you look at the nature of the crises, you see that it is mainly small companies that are collapsing, companies that were already under pressure.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
