Despite the current difficult economic situation, a wave of insolvencies is unforeseeable. What is striking, however, is that fewer and fewer people want to set up a business.
The number of corporate insolvencies increased by five percent in the first half of the year to 2,609 compared to the same period in the last year before the coronavirus, 2019. But if you only look at the second quarter, the number of 1,290 has remained practically stable compared to 1,266 in 2019, according to figures published by Statistics Austria on Thursday. In comparison to last year: In the first half of 2022, there were 2327 business failures. In the second quarter of last year there were 1283.
Currently 14 bankruptcies per day
With almost 14 corporate insolvencies per day, which can be calculated from the data, there is currently no sign of a wave of insolvencies. However, according to the statistics authority, the number of bankruptcies has risen slightly in (financial) services, trade and construction.
Most recently, however, there was the massive bankruptcy of Kika/Leiner. There were also Forstinger, Gerry Weber and Salamander. In difficult times, people take a closer look at their expenses. Non-urgent purchases are being postponed because inflation is still extremely high and falling only slowly. Retailers in particular are feeling this. Purchasing behavior has also shifted to the internet, which not all trading companies are sufficiently prepared for, says insolvency expert Cornelia Wesenauer of AKV.
Big challenges
In general, the economy is slow. According to Wifo, economic output in Austria contracted in the second quarter. There has been stagnation since mid-2022. The assessment of the business situation is now in negative territory.
“The catch-up effect of Corona has only a limited effect,” said Gerhard Weinhofer of creditor protection association Creditreform when presenting his insolvency statistics yesterday, Wednesday. “But there are also challenges such as inflation, a shortage of skilled labour, weak domestic consumption and the ailing state of Austria’s main trading partner, Germany.”
Eight percent fewer start-ups
A total of 31,177 plans to establish a company were registered in the first half of the year. Compared to the same period last year, when there were 33,906 so-called registrations of legal entities, this corresponds to a decrease of about eight percent. Also, there is a decline from the first half of 2019 compared to the first half of the year before the pandemic started. At 13 percent this is even stronger, in the first semester there were 35,726 registrations.
Unlike the formation of a company, the registration of a legal entity is part of an administrative procedure and should be understood as a letter of intent. It does not necessarily mean that an economic activity in the sense of turnover or employment is actually taken up. Still, registrations are an important leading indicator for the economy. The minus in the second quarter was the clearest at 15 percent. This year there were 13,974 registrations from April to June, in the same period of 2022 there were 16,531 and before the corona crisis 16,047.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
