State aid prevents wave of bankruptcies in Europe

Extensive state interventions in the Corona year 2020 prevented a wave of bankruptcies not only in Germany, but throughout Europe.

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ILast year, around 120,000 corporate insolvencies were registered in 15 Western European EU countries as well as Norway and Switzerland – a decrease of 26.9 percent compared to the previous year. That emerges from a study published on Thursday by the credit agency Creditreform. Despite all the stresses caused by the pandemic, the number of company bankruptcies was lower than it has been in three decades. In the countries of Central and Eastern Europe, too, the number of bankruptcies fell by 8.8 percent to 44,782 bankruptcies.

The head of Creditreform economic research Patrik-Ludwig Hantzsch explained the “paradoxical decline in registered insolvency cases” in the Corona crisis with the considerable financial aid from the states and with changes to insolvency law due to the pandemic.

In his opinion, however, the low bankruptcy figures are not the reason for the all-clear. The development does not reflect the true economic situation of many industries and companies. Hantzsch warned that even before the crisis, more than one in five companies in Western Europe made no profits with their business model. In connection with the expiry of the state aid measures, increasing insolvency figures can therefore be expected.