Allianz Trade Insolvency Report

• In 2023, 3 out of 4 countries recorded a rebound in business insolvencies, resulting in a +7% rise at the global level.
• 2024 might mark the end of the catch-up, with a third rise in a row in business insolvencies (+9%) driving 2 out of 3 countries above their pre-pandemic levels.
• After these gradual yet consecutive rises, global business insolvencies might stabilize in 2025 (0%) but settle at a high level.

Lower growth, trade disruptions and geopolitical uncertainty set the stage for another acceleration in global business insolvencies in 2024. Allianz Trade expects a third escalation in a row this year (+9%), fueled by a continuing increase in four out of five countries. The largest increases are expected in the US (+28%), Spain (+28%) and the Netherlands (+31%).

“This broad-based rise would push two out of three countries above their pre-pandemic number [2] of insolvencies in 2024, from half in 2023. The after-shocks economy brings a large set of headwinds and challenges. These will now test the resilience of corporates that have become the most fragile over the past 3 years. We expect that these developments will lead business insolvencies to settle at a high level in 2025: +12% above their 2019 level in the US, +8% in France and +6% in Germany”, states Aylin Somersan Coqui, CEO of Allianz Trade.

Allianz Trade does not expect a tsunami of business insolvencies as recorded in the aftermath of the great financial crisis, when global insolvencies skyrocketed by +17% and +19% in 2008 and 2009, respectively. However, the catch-up should be noticeable in several countries, in particular the advanced economies of Europe, due to specific firms (the most exposed to profitability and financing issues) and specific sectors (notably B2C related sectors and construction).

Allianz Trade thus identify 5 reality checks for companies in the years to come:

1. A profitability squeeze is looming. Before benefiting from the global recovery in sight for 2025, firms will have to manage the deceleration in global demand. In several countries, the level of activity is unlikely to reach the minimum required to at least stabilize the number of insolvencies. According to Allianz Trade, the Eurozone and the US would both need +0.7pp in additional GDP growth on average in 2024-2025 to stabilize their number of insolvencies.

2. Uncertainty is on the rise, from geopolitics to rising non-payment risk. After a series of shocks in recent years, the packed election calendar in 2024 will add to economic uncertainty as countries that account for 60% of global GDP head to the polls. This context will add a layer of complexity and risk to business operations, by making it challenging for firms to make accurate forecasts and business plans, and creating volatility in input costs. Moreover, regulation is also on the rise, which may force firms to make costly additional efforts to comply. Our non-payment risk score based on our proprietary credit exposure reveals that firms are getting more and more concerned by non-payment, with the index being at its highest level since 2022.

3. Financing and liquidity conditions are still tight. Firms will continue to face costly financing, maintaining concerns on their capability to absorb the costs of borrowing and mitigate the pressure on overall profitability. At the same time, the limited availability of financing will put the most exposed sectors and firms at risk while the number of fragile firms remains noticeable in the UK (15%), France (14%), Italy (9%) and Germany (7%). 

4. New businesses will face their first real resilience test. We expect the post-pandemic acceleration in business creation to push up the ‘natural’ rise in business insolvencies. In Europe, new business registration proved to be +14% higher in 2021-2023, compared to 2016-2019. For those firms, 2024 will be the first ‘true’ test of resilience, especially in countries that saw the newest businesses being established, notably France (+47%), the Netherlands (+28%) and Belgium (+14%).

5. Some sectors pose higher risks to jobs and the wider economy. The sectors and firms most exposed to the risks of weaker-for-longer demand and prolonged high financing costs are those that rely on discretionary spending (manufacturing and retail of non-essential goods, hotels, restaurants, tourism and other leisure activities) and labor-intensive ones (construction, road transportation, hotels, restaurants, health care, specific business services). Construction and real estate, which already experienced noticeable jumps in Europe and Asia in 2023, will boost national numbers of business insolvencies due to the cyclical downturn and for business demographic reasons. The continuation of the most recent pace would mean over 16,000 firms going bust in France, over 7,000 in the UK, close to 4,000 in Germany and 2,000 in Italy.

Want to check all our insolvency forecasts and analysis? Take a look at our 2024 Allianz Trade Insolvency Report!

Press contact

Maxime Demory

+33 06 46 21 72 69

maxime.demory@allianz-trade.com

About Allianz Trade

Allianz Trade is the global leader in trade credit insurance and a recognized specialist in the areas of surety, collections, structured trade credit and political risk. Our proprietary intelligence network analyses daily changes in +80 million corporates solvency. We give companies the confidence to trade by securing their payments. We compensate your company in the event of a bad debt, but more importantly, we help you avoid bad debt in the first place. Whenever we provide trade credit insurance or other finance solutions, our priority is predictive protection. But, when the unexpected arrives, our AA credit rating means we have the resources, backed by Allianz to provide compensation to maintain your business. Headquartered in Paris, Allianz Trade is present in 52 countries with 5,500 employees. In 2022, our consolidated turnover was € 3.3 billion and insured global business transactions represented € 1,057 billion in exposure. For more information, please visit allianz-trade.com