Allianz Trade Insolvency report

In its latest Global Insolvency Report, Allianz Trade reveals a more severe outlook for the global business landscape, with insolvencies projected to climb by +11% in 2024 – an even steeper rise than previously anticipated. The report highlights key trends and risks for businesses worldwide, as the global economy grapples with sluggish demand, ongoing geopolitical tensions, and uneven financing conditions.

A faster-than-expected global acceleration

When Allianz Trade released its first global insolvency forecasts in February, the company was already expecting a strong increase in 2024 (+9%) followed by a stabilization in 2025. However, recent developments have led to an even grimmer picture, with a +11% rise now forecast for this year (+2pps vs previous forecast), followed by a peak in 2025 at +2% (+2pps vs previous forecast). Business insolvencies will therefore not stabilize until 2026, and even then, they will remain at high levels.

In the US, Allianz Trade expects insolvencies to rise by +12% in 2025 before falling by -4% in 2026. In Germany, they will increase by +4% before falling by -4% in 2026. In France and the UK, they will slightly moderate from very high levels (-6% in 2025 for both vs -3% and -4% in 2026 respectively) while in Italy they will continue to rise (+4% and +3% respectively). In China, business insolvencies will start to increase from low levels, +5% and +6% in 2025 and 2026, respectively.

More than half of the global GDP will be hit by double-digit increases

Year-to-date, business insolvencies have already increased by +9% and the rise has been broad-based across geographies and sectors. Globally, Allianz Trade’s 2024 insolvency index is likely to stand +13% above its 2016-2019 average, but -11% below its Global Financial Crisis level.

“This global rollercoaster ride in business insolvencies is partly due to still-subdued global demand, persistent geopolitical uncertainty, and uneven financing conditions. It can also be explained by the ‘backlog’ of insolvencies, as companies are no longer shielded by the support measures put in place during the pandemic and the energy crisis. That’s why countries accounting for more than half of global GDP will be hit by double-digit insolvencies increases in 2024, and two-thirds may surpass their pre-pandemic numbers this year. Construction, retail, and services have been hit the hardest, both in terms of frequency and severity ”, adds Aylin Somersan Coqui, CEO of Allianz Trade.

Notably, major insolvencies have also reached a new record high level, with Western Europe leading this trend. This also poses a major threat to employment, particularly in Europe and North America. By 2025, over 1.6 million jobs could be on the line in these regions, 8% of the total number of people unemployed, marking the highest level in a decade. Main sectors at risk are construction, retail and services sectors.

Can lower interest rates be a game changer for corporates?

While a gradual easing of monetary policies could offer some relief, it won’t be a silver bullet for struggling businesses. Lower interest rates reduce borrowing costs, improve cash flow, and boost profitability but they cannot fully address the financial challenges looming over companies.

“Corporates have already been deleveraging and adjusting to high rates. Our analysis suggests the current easing cycle (-2pps by September 2025) would lead to -4pps reduction in the insolvency trend, thanks to higher margins (up to +2pps in Germany, +4pps in France, +3pps in the UK and +2.8pps in the US). However, this would only slightly offset the overall increase in the US, for example, and reinforce the decrease in France”, ends Maxime Lemerle, Lead Analyst for insolvency research at Allianz Trade.