EU business failures are highest since 2015

There has been a significant increase in corporate failures in the EU.

Analysts say that slow economic growth and a lack of help from the government have forced many companies to close.

Eurostat, the EU's statistics office, said this week that the number of bankruptcy filings in the second quarter of 2023 was the highest in eight years.

Compared to the previous quarter, the number of companies that went out of business between April and June rose by 8.4%. The agency said that this is the sixth quarterly rise in a row. During the reporting time, there were the most bankruptcies since Eurostat started keeping track of this data in 2015.

New data shows that bankruptcy filings were up in all parts of the economy. The most significant increases, though, were in the areas of housing and food (up 23.9%), transportation and storage (15.2%), and education, health, and social events (10.1%).

The number of people asking for bankruptcy has gone up the most in Hungary (up 40.8%), Latvia (up 24.8%), and Estonia (up 24.6%). Cyprus (down 48.5%), Croatia (down 23.6%), and Denmark (down 15.9%) saw the most significant drops in the number of companies that were about to go bankrupt.

Eurostat data shows that the number of new businesses registered across the bloc fell by 0.6% during the same period.

Experts say that the rise in bankruptcies is due to the lack of stability and slowing economic growth in the EU, which has been dealing with higher interest rates caused by rising inflation. Some also point out that the Covid-19 aid packages, which helped failing companies stay afloat during the pandemic, ran out.

Christoph Niering, who oversees the Professional Association of Insolvency Administrators in Germany, told the Wall Street Journal, "We're now seeing the market shake out." He said that many businesses that now want help from the government were already having trouble before the pandemic, so it shouldn't be a surprise that they're going bankrupt because their funding and wage costs have gone up.

Thomas Humblot, an analyst at BNP Paribas, had the same point of view. He told the news outlet that the rise in bankruptcies is "normal" and that the end of aid to companies during the pandemic "is likely to contribute to the rise in bankruptcies caused by a worsening economic environment."