"Germany is being hit by a wave of insolvencies. Now in the third year of a prolonged recession, the economic situation is more alarming than during the 2009 financial crisis.The death spiral of German businesses has reached dramatic proportions. According to the Leibniz Institute for Economic Research in Halle (IWH), the second quarter of 2025 saw the highest number of insolvencies among partnerships and corporations in 20 years. Despite a slight decline in June, the trend remains: Germany’s economic substance is eroding — and with it, the nation is quietly bidding farewell to its prosperity.
Mass Extinction of German Companies In June alone, the IWH economists counted 1,420 corporate bankruptcies — down 4% from May. But year-on-year comparisons reveal the full scope of the crisis: a 23% increase from June 2024. The figures are also over 50% higher than the pre-lockdown average. Particularly noteworthy: In economically strong states like Bavaria and Hesse, insolvencies rose disproportionately by 80% and 79%, respectively.Altogether, 4,524 company insolvencies were recorded in Q2 — a 7% rise compared to Q1 2025.Economists cite not only the ongoing recession but also a long-overdue market correction following years of ultra-low interest rates from the European Central Bank. As Steffen Müller, head of insolvency research at IWH, puts it: “For many years, extremely low interest rates prevented bankruptcies, and during the pandemic, state aid kept alive firms that were already weak.” Now, the market is reclaiming its cleansing power.
