The German economy is in free fall, with one out of every seven businesses in danger of going bankrupt due to rising inflation.


The German economy is in free fall, with one out of every seven businesses in danger of going bankrupt as inflation erupts.

THE GERMAN ECONOMY has continued to deteriorate, with one out of every seven businesses fearing closure as the European Union’s largest economy experiences unprecedented inflation.

According to findings from a report released in December by the Munich-based Ifo Institute for Economic Research, which surveyed 9,100 companies across all industries.

It found that 14 percent of the companies polled fear for their survival as the Covid pandemic continues to wreak havoc across Germany.

17.1% of retail businesses expressed concern about their future last month.

This is up from 14.4% in June 2021, when the most recent survey was conducted.

In the hospitality industry, the situation is becoming increasingly dire, with more than half of restaurants and pubs (52.5%) fearing for their survival.

The critical tourist accommodation sector appears to be in even worse shape, with a figure of 58.8 percent, up from 52.1 percent six months ago.

Manufacturers, on the other hand, have better news, with only 5.7 percent of businesses in this sector facing closure.

“Travel agencies and tour operators still feel particularly at risk, with 73.2 percent, and companies in the event industry with 67.4 percent,” said Klaus Wohlrabe, head of the ifo surveys.

“This is also a consequence of consumer reluctance,” he added, referring to the finding that 17.1 percent of retail companies fear for their future.

However, the feared German bankruptcy wave has not materialized, at least not yet.

According to credit agency Creditreform, the number of corporate insolvencies decreased by 10.8% last year to 14,300 cases.

Despite the Covid restrictions imposed on several industries and the under-pressure economy, the company attributes this to extensive state aid.

“When it comes to corporate bankruptcies, we measured the lowest value since the bankruptcy code was introduced in 1999, and we only counted half as many bankruptcies as we did in 2012,” Creditreform said.

Germany’s inflation is expected to reach its highest level in nearly three decades, according to data released last week.

According to the country’s Consumer Price Index, inflation in December was estimated to be 5.3 percent.

The inflation rate for 2021 is expected to be 3.1 percent, up 0.5 percent from November.

That rate of inflation would be the highest.

“Brinkwire News Summary.”


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