The latest data is a grim indication of Europe’s economic health.
Business insolvencies in the EU have hit record highs, latest data has shown.
According to the bloc’s official statistics agency Eurostat, the number of businesses declaring bankruptcy in the second quarter of 2023 increased by 8.4% compared to the first, fueled by trouble in the food and housing sector.
The figures mean bankruptcies have increased for the sixth consecutive quarter, unseen since Eurostat started collecting data in 2015.
Insolvency claims rose to their highest level in the fourth quarter of 2022 as state support due to the COVID pandemic was slowly cut off.
The European Commission first announced more than €8 billion of financing in April 2020, providing immediate relief to small and medium businesses across the bloc.
While the aid packages and subsequent schemes cushioned enterprises from severe financial crashes, their performance after the easing of restrictions has not been promising.
The number of businesses filing for bankruptcy has continued to rise since the second quarter of 2022, with national debts also increasing.
On the flip side, the number of new business registrations in 2023 in the EU has hit the highest figures in 2023 compared to the previous eight years.
Food and accommodation sector struggles post-pandemic
While businesses from all major sectors witnessed an increase in insolvency, the food and accommodation sector seemed to be struggling the most.
Accommodation and food services saw a 23.9% increase in the number of companies going bankrupt, a fall primarily attributed to challenges from the cost of living crisis.
That is a whopping rise of 82.5%, compared to the final quarter before the pandemic restrictions.
The sharp rise of failing companies has also become a norm in the transportation and storage sector, impacted directly by soaring energy prices.
Only two industry and construction sectors maintained a lesser number of insolvency registrations compared to the last quarter of 2019 in the latest figures.
Source: Euronews
