The number of bankruptcies will increase by 21%

As every year, we have listed the bankruptcy figures of 44 countries using the Global Insolvency Index. The trend is clear: the number of bankruptcies is accelerating. The 21% global rise is caused by slowing growth and tighter credit conditions.

After this strong increase in 2023, the number of bankruptcies worldwide will increase by another 4% next year. According to the researchers, 3 out of 5 countries will exceed their pre-pandemic bankruptcies level in 2024, while Belgium will reach its 2019 pre-pandemic level as early as 2023.

Belgium at pre-pandemic level

After finishing in the top 3 for the highest number of bankruptcies in the euro zone (+42%) in 2022 with 9,265 bankruptcies, Belgium will return in 2023 to its pre-pandemic level of 2019 with an increase of 6% with 9,850 bankruptcies.

This high score in 2022 is the result of a strong increase in almost all sectors. For example, B2B services & accommodation and catering activities saw increases of 27% and 55% respectively. Other sectors with a high specific weight in the Belgian economy, such as transport/storage and construction, experienced growth rates of 36% and 38% respectively, which led to the pre-pandemic level of bankruptcies.

We expect Belgium to register even more bankruptcies in the coming years due to the difficult economic and financial climate: +6% in 2023 with 9,850 bankruptcies and +3% in 2024 with 10,170 bankruptcies. It also means an above average number over the period 2015-2019, before the artificial drop in 2020-2021 created by government aid during the coronavirus crisis.

Johan Geeroms, our Risk Underwriting Director Benelux: "The continued increase in the number of bankruptcies in 2023 and 2024 is explained by the relatively weak GDP growth forecasts, this growth being a prerequisite for the reduction in bankruptcies (the BNB puts GDP growth at just 0.6% for 2023), continued pressure on profitability and tighter longer-term financing conditions. As a result, Belgium will go back above the bar of 10,000 annual bankruptcies by 2024.”

Records in the Netherlands

There are big differences between countries, such as in the United Kingdom, where we recorded an increase of +51% last year and +16% currently. France is doing even better, with +48% last year, and again +41% this year. It is worth noting the strongest increase of +52% in the Netherlands, after the strong decrease of -43% in 2021 and the increase of +18% in 2022. Many SMEs there are now facing problems of payment of corona debts and tax arrears. We forecast a further increase of +8% in 2024. In absolute figures, this represents 3,270 bankruptcies in 2023 and 3,530 in 2024. While the annual average over 2017-2019 was 3,760 bankruptcies. The Netherlands, with +52%, and the United States, with +49%, are in the unenviable top group globally.

No surprise in the eurozone

As far as the eurozone is concerned, Johan Geeroms believes that the sharp increase in the number of bankruptcies is not really a surprise. “Earnings are under pressure, in part due to rising wages and additional energy and financial costs. The resilience of the most vulnerable businesses is being put to the test. This situation is particularly problematic in sectors that are struggling to increase their prices due to strong competition.”

According to Johan Geeroms, retail, transport and construction are particularly vulnerable. Large companies are also likely to disappear. “Our report clearly shows that the number of bankruptcies of companies with a turnover of more than 50 million euros already exceeds the pre-pandemic level. These large companies usually bring a whole series of smaller companies in their wake.”

China is doing well

China is relatively spared from the increase in the number of bankruptcies, with only +4% this year and +5% next year. Johan Geeroms: “The economy there is taking full advantage of the recovery. However, a few caveats are in order. The real estate sector, for example, is hardly healthy.”