Every day, the media reports on new insolvencies. The sector is hardly relevant anymore: fashion houses, restaurant chains, shoe stores, or construction companies – all sectors of the economy are affected. However, the underlying causes differ between industries. If the individual segments of the construction industry are grouped together, this sector is by far at the top. What does the insolvency wave look like in detail?
The Trend in Insolvencies Is Upwards
In the first quarter of 2025, the number of nationwide insolvencies rose by 52 percent compared to 2020. The Leibniz Institute for Economic Research Halle cites three reasons for this:
- The end of COVID-19 aid
- Increased loan interest rates
- Deferred insolvencies postponed by COVID-19 aid
(Source: MDR)
Causes of Insolvency Also Sector-Specific
Let’s take a closer look at three sectors. If the individual areas of the construction industry are considered separately, the courier and postal services sector is at the top. Actually, one would assume that this sector should be flourishing due to online commerce. In terms of workload, it is – drivers often work at the limits of their physical capacity. However, those working for the big companies like UPS or GLS are subcontractors of subcontractors for the delivery services and, as such, self-employed. Vehicle and fuel costs, in case of doubt, are borne by them personally – and this with shrinking margins. The competition is fierce. Those who do not drive earn no money, and fuel costs or illness are practically the insolvency risk.
Construction companies are struggling with a lack of workers and enormously increased prices for building materials. Wood, still a necessary component in construction, has virtually exploded in price. Euro pallets, often used by trade fair builders, cost five euros each before the pandemic, around 50 euros in autumn 2022. For developers, it was cheaper to buy themselves out of fixed-price contracts with customers for five-figure sums than to pay even more due to material prices in the end.
The insolvency risks in gastronomy also result from two factors. On the one hand, restaurants can sometimes no longer open as usual because there is not enough staff to run a two-shift operation. On the other hand, consumption has also declined sharply. The reason for this lies in the increased cost of living not only for private households in recent years. In addition, price corrections upwards have also become necessary in restaurants, otherwise the margins for restaurateurs would decline even further. If food for customers at home becomes more expensive, restaurateurs also have to dig deeper into their pockets when shopping.
The leasing of workers as a business model can only function if these workers are available on the labor market. But as the examples of construction and gastronomy show, they are missing – and thus also for temporary employment agencies.
Gloomy Forecasts for the Future
The information service provider CRIF paints a bleak picture for Germany in 2025. In 2024, insolvencies in Germany rose by 25 percent, reaching the highest level since 2015, when there were 23,222 insolvencies. For 2025, the forecast is for an increase of 18.4 percent to up to 26,000 insolvencies. Consumer restraint will continue. Possible price increases due to the tariff chaos in the USA have not yet been taken into account. The same applies to the insolvency risk of some German health insurance companies. In April 2025, reserves were sufficient for only two and a half days
(Source: agrarheute.com)
