The economic gods remain thirsty for blood, warned a credit insurer

The number of companies forced into bankruptcy by the recession is set to surge by 35% this year, according to a survey published by Euler Hermes, the credit insurer.

The report predicted longs months of gloom, uncertainty and risk turning the world economy into a ‘burial ground’ for businesses.

The final figure of business insolvencies for 2008 proved even worse than originally anticipated, said Euler Hermes, with the number of cases shooting up by 27% worldwide, by a third in Europe and by half in the US.

The Paris-based unit of Allianz predicted that certain countries, such as Spain, the United Kingdom, Ireland, the US, and the Baltic countries would see insolvencies rise for the second consecutive year by more than 40%. There is little likelihood of an easing off next year, it added.

The first sectors to be hit by the recession were finance and construction. Next in the line of dominoes rests the industrial sector, warned the credit insurer. Retailing, wholesaling and transport are also feeling the full brunt of the crisis.

A large number of companies have been forced to call on their cash reserves to survive the shock of the last three quarters, said the report, which means just a few more moths of empty order books could send them over the edge.

“The final figure of business insolvencies for 2008 proved even worse than originally anticipated.

‘The economic gods will remain hungry for sacrifice for quite some time,’ warned the report.

Country trends


The British economy has sunk into a severe recession, hit by the full brunt of the collapse of the in the real estate market and the worsening of the crisis in finance and banking, warned the research.

GDP fell by 0.7% in Q3 2008 and by 1.5% in Q4.

Overall, business insolvencies in England and Wales rose by more than 30% over 2008, to a total of close to 30,000 cases, a new 10-year record, found the report.

“The British economy has sunk into a severe recession.

‘Company insolvencies totalled more than 21,800 cases in 2008, an increase of 6,000 in the space of a year.’

Over the same period business profits fell by 10.5%, said Euler Hermes.


‘Germany is caught up in the deepest economic contraction ever recorded in the post-war period,’ said the report.

‘The intensity and speed of the downturn is unparalleled, and no end is yet in sight.’

According to the report, a sharp dip in growth in the second half of last year led to an increase in corporate insolvencies. There were 0.4% more insolvencies in 2008 over 2007. The number of insolvencies reached 29,291 by the end of 2008.

“France entered into technical recession in the fourth quarter of last year.


In 2008 French GDP growth dropped to just 0.3%, after 2.3% in 2007.

France entered into technical recession in the fourth quarter of last year.

The 6% increase in insolvencies seen in 2007 rose to 15% in 2008, the biggest increase since 1991, according to Euler Hermes.

‘The increase in insolvencies spread to all businesses regardless of size, although there was a significant increase on the part of businesses with more than 100 employees,’ read the research.

Expected change in insolvencies

Annual change in % 2009/2008
Global Insolvency Index 35%/27%
UK 56%/31%
USA 45%/54%
China 10%/5%
Brazil -8% -18%
Euro zone 35%/33%
France 25%/15%
Germany 19%/0%
Netherlands 75%/1%
Norway 66%/28%
Spain 58%/187%
Denmark 40%/54%
Sweden 35%/9%
Finland 32%/14%
Italy 31%/45%
Portugal 30%/67%
Hungary 30%/15%
Czech Republic 28%/-3%
Poland 26%/-10%
Belgium 18%/10%
Switzerland 16%/-2%
Greece 15%/10%
Austria 15%/0%
Luxembourg 15%/-12%