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Now that corona-related government support has been stopped since last year, the number of bankruptcies will probably return to pre-corona levels this year and some of the companies that have been kept afloat will still collapse. Worldwide, the number of bankruptcies will rise by 49% this year.
In the Netherlands, there was still a strong decrease in the number of bankruptcies in 2020 and 2021. In these years, the extensive government support greatly improved the liquidity position of companies. Immediately after this was discontinued, the number of bankruptcies initially remained low, but in the last quarter of 2022, the number of business closures increased rapidly. The increase over the whole of 2022 ultimately amounted to 14% compared to the previous year. Now a much larger increase (+79%) in the number of companies that have to close their doors. In the Netherlands, the major support programs were discontinued in the second quarter of 2022. In combination with the strongly increased energy prices, the high interest rates and the economic downturn as a result of the war in Ukraine, this poses major financial challenges for companies. This sum of factors is expected to lead to a sharp increase in the number of bankruptcies in 2023.
The Netherlands is one of the strongest risers worldwide
The Netherlands – alongside South Korea (+154%), Italy (+90%), New Zealand (+82%) and the United States (+74%) – is one of the countries where the strongest increase in the number of bankruptcies are expected. In 2022, these countries still showed a decrease or – in the case of the Netherlands – a relatively modest increase, but everything indicates that a tipping point will be reached this year. Now that large-scale government support has ended in all these countries, the general expectation is that the number of bankruptcies will return to pre-coronavirus levels.
Other countries
At the same time, in a number of countries the number of bankruptcies will hardly increase this year or even decrease. This applies in particular to Spain (-22%) and Switzerland (-13%), where business closures have already risen above pre-corona levels in the past two years. As a result, these countries are likely to see a decrease in 2023 compared to 2022. In other European countries – such as Austria (+2%), Finland (+3%), the Czech Republic (+9%) and Sweden (+12%) – there has been a relatively mild increase this year. The United Kingdom is somewhat out of step with other European countries. The insolvency level here is already above pre-coronavirus levels. Moreover, a further increase is expected in 2023 (+11%). This development is prompted by the weak economic recovery since Brexit.
Changing outlook in 2024
While bankruptcies are rising in almost all countries this year, expectations for 2024 are mixed. In some countries – such as New Zealand (+62%), South Korea (+35%) and Singapore (+30%) – insolvencies are expected to increase, while in others – such as Canada (-9% ), the United Kingdom (-4%) and Belgium (-5%) – the decline is starting. Worldwide, a 12% increase in the number of bankruptcies is expected next year. Insolvency levels are expected to normalize in many countries in 2024, making developments much more subdued than in 2023.
Bankruptcies in fashion, shoes and textiles
It is expected that our sector will also be hit hard. We are already noticing some of this. Bankruptcies of Scotch & Soda, AmazingKids and other brands / suppliers, moratoriums of Peek & Cloppenburg and Makro Belgium, business closures of various French retail chains and the recent results of various large(r) retailers are also not good. It is wise to keep following your customers closely, to monitor their payment behavior closely and it is advisable to insure your turnover against non-payment. Insolvencies in our industry can be followed closely on our website.
If you would like more information, please contact us. We can further advise you on market developments, customer information and options for insuring your turnover against non-payment. Email at info@modintcredit.com and call us at +31885054700.
