Corporate insolvencies will take off sharply next year internationally after falling sharply during the pandemic and then slowly recovering this year, predicts the insurer Allianz Trade in a study published Thursday.
“After two years of decline we anticipate a general acceleration of business failures,” wrote the insurer in a report published Thursday and titled “business risk is back”.
On a global scale, it anticipates an increase in failures of around 19% in 2023 compared to the current year, against + 10% in 2022. They are “already a reality”, notes the organization which underlines the progression double digits in bankruptcy proceedings already in India, Australia, Canada, Turkey and Austria in the first half of 2022.
Rising interest rates and wage increases granted due to inflation are two of the factors explaining the increased difficulties of companies, particularly in the construction, transport, telecom and textile sectors. The increase in insolvencies is all the more marked as these were at an artificially low level during the pandemic due to financial aid.
In detail, Western Europe has already recorded one of the highest levels of the areas studied in the first half of the year, with an increase of 24% of failures over one year. “If we look ahead, the energy bill will remain the main obstacle to profitability“says Allianz Trade in reference to soaring electricity and gas costs since the outbreak of war in Ukraine.
Europe is meeting with mixed fortunes: France and the United Kingdom should record a 10% increase in insolvencies over the whole of 2022, but Italy should see them decline. Like Italy, other countries such as the United States, China and Germany are still benefiting from low levels of corporate insolvencies.
“After two years of decline we anticipate a general acceleration of business failures,” wrote the insurer in a report published Thursday and titled “business risk is back”. On a global scale, it anticipates an increase in failures of around 19% in 2023 compared to the current year, against + 10% in 2022. They are “already a reality”, notes the organization which underlines the progression double-digit insolvency proceedings already in India, Australia, Canada, Turkey and Austria in the first half of 2022. Rising interest rates and wage hikes granted due to inflation are two of the factors explaining the increased difficulties of companies, in particular in the construction, transport, telecom and textile sectors. The increase in insolvencies is all the more marked as these were at an artificially low level during the pandemic due to financial aid. In detail, Western Europe has already recorded one of the highest levels of the areas studied in the first half with a 24% increase in failures over one year. “Looking ahead, the energy bill will remain the biggest drag on profitability,” says Allianz Trade, referring to soaring electricity and gas costs since the outbreak of war in Ukraine. Europe is meeting with mixed fortunes: France and the United Kingdom should record a 10% increase in insolvencies over the whole of 2022, but Italy should see them decline. Like Italy, other countries such as the United States, China and Germany are still benefiting from low levels of corporate insolvencies.
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