A crisis unseen for decades is battering German businesses.

In Germany, the number of insolvency proceedings has reached its highest level in 20 years, as more companies buckle under the weight of economic turmoil. In October alone, 1,530 individuals and companies filed for bankruptcy, representing a 17 percent increase from the previous month, according to the latest research from the German Economic Institute (IWH).

IWH-#Insolvenztrend: Zahl der #Firmenpleiten auf höchstem Oktoberwert seit 20 Jahren. In 🇩🇪 wurden 1.530 Personen- und Kapitalgesellschaften #insolvent gemeldet = 17% mehr als im September und 48% mehr als im Oktober 2023. 🧵1/3

➡️ Mehr hier: https://t.co/XSGWTKK41H#Insolvenz pic.twitter.com/IwBcMmTrKF

— IWH (@IWH_Halle) November 7, 2024

Steffen Muller, an IWH researcher, noted that this October figure is the highest for the month in two decades. Each month this year, at least 1,000 companies have filed for bankruptcy, but it is only now that the number has topped 1,500. Among recent notable cases is the Munich-based taxi start-up Lilium, which was forced to cease operations in October.

The German press reports that while the IWH attributes these insolvencies to the generally weak economic climate, including a 0.3-percent drop in GDP in 2023 and a further expected decline of 0.2 percent this year, other factors are also at play. Rising raw material costs, high labour expenses, a shortage of skilled workers, weak international demand, and soaring energy prices are all contributing to the crisis.

Several companies are resorting to drastic cost-cutting measures. Volkswagen, for instance, is planning to shut down three factories and cut up to 30,000 jobs. However, VW is just one among many companies being forced to reduce their workforce, in what some economists describe as part of Germany’s gradual de-industrialisation. Looming clashes with trade unions could further exacerbate the existing tensions.