A study by a major German credit insurer has shown an increasing number of large firms filing for insolvency could have a domino effect on the entire German economy. Weak growth is also predicted for 2020.
Significantly more German companies filed for insolvency in 2019 than in 2018, according to a study by German credit insurer Euler Hermes.
Insolvencies of large German companies increased by 42% in the first 9 months of 2019, when compared to the same time last year. Twenty-seven German companies with turnover exceeding €50 million ($55 million) folded, compared to 19 cases in 2018.
According to the study, the insolvencies have hit a broad swath of important sectors like manufacturing, services, retail and energy.
Some big names in 2019 included wind turbine manufacturer Senvion, industrial parts company Eisenmann, airline Germania, sports equipment manufacturer Kettler, and retailers Gerry Weber and Beate Uhse.
The German branch of the shuttered British travel company Thomas Cook also filed for insolvency this year.
“Many sectors are facing numerous challenges that they need to overcome,” said Ronald van het Hof, chief of Euler Hermes in Germany, Austria and Switzerland.
“Almost all companies in Germany are dealing with a massive structural shift with digital transformation and sustainability policies.”
Overall, the most German insolvencies in the first three quarters of 2019 were in the retail and construction sectors.
“What is really dramatic about these large insolvencies is the domino effect on a lot of companies along the supply chain,” said van het Hof.