Corporate bankruptcies are increasing at double-digit rates in most advanced economies as borrowing costs rise and governments unwind pandemic-era measures to support business worth trillions of dollars, the Financial Times reported. Following a decade of decline the number of U.S. corporate bankruptcies rose 30 per cent in the 12 months to September compared with the year-ago period, according to courts data. Germany, the EU’s largest economy, said bankruptcies rose 25 per cent from January to September compared with the year-ago period. Since June, monthly “double-digit growth rates have been consistently observed compared to the previous year”, the country’s statistical office Destatis said on Tuesday. Across the bloc, corporate insolvencies rose 13 per cent year on year in the nine months to September to reach their highest level in eight years, according to Eurostat. Higher interest rates, along with the collapse of zombie companies that had survived on COVID-era government support, have fuelled the trend, according to Neil Shearing, chief economist at Capital Economics. Shearing cited “the cost of debt servicing” and “the rollback of pandemic support” as well as “high energy bills, particularly in energy-intensive sectors”. The industries suffering the most from the increased insolvency rates included transportation and hospitality, analysts said. Businesses weathered the precipitous downturns triggered by the pandemic thanks to massive government support schemes for companies and households that amounted to more than $10tn, according to IMF estimates for 2020 and the first four months of 2021. But since then the packages have been largely withdrawn.
