Corporate insolvencies in Western Europe

10.09.2018
Corporate insolvencies in Western Europe

In 2017, companies in Europe continued to stabilise.

In Western Europe, including Norway and Switzerland, 7,200 fewer companies (4.2%) went into insolvency. In addition, in Central and Eastern Europe insolvency declined further compared to the previous year. A significant drop of 12.8% was registered.

There are two reasons for the comfortable situation in Europe. One is a sustained economic recovery and the other is the favourable financial situation – although a question mark can be placed over the interest rate situation, because it seems interest rates are likely to increase again in 2019 at the latest. Given the over-indebtedness of companies – particularly in Italy and France – this might push the number of collapses upwards again. But despite this risk, a return to “normal interest rates” will also have a stabilising effect.

The United States has already reached a turning point in terms of interest rates. In 2017, American companies were not affected in terms of bankruptcies. There was a negligible increase in the number of company insolvencies in 2017 up to 38,062. But the good economic conditions also play an important role in the United States: The growth rate in gross domestic product was two per cent higher than in the previous year.

The danger lies not in the financing and economic activity on either side of the “pond” but rather in the interaction between the long-term partners of Europe and America, particularly in economic policy terms. An aggressive judiciary in the USA and pressure with customs barriers and the solidarity called for by Europe in regard to sanctions; create risk factors that could at least contribute to the failure of some companies.

Development of corporate insolvencies in Western Europe 2016/2017

Netherlands -25%

Ireland -15%

Portugal -12%

Finland -10%

Germany -6%

Italy -6%

France -6%

Luxembourg -5%

Spain -4%

Denmark -4%

Austria -3%

Norway 0%

United Kingdom +2%

Switzerland +3%

Sweden +6%

Belgium +8%

Greece +11%