Insolvencies will spiral worldwide warns credit insurer
Corporate insolvencies will rise by more than a quarter each year for the next two years, lading credit insurer Euler Hermes has warned. The firm’s “Global Insolvency Index” will rise 25.1% this year and another 25.4% in 2009.
“The recession has the economy in its grip all over the world,” says Clemens von Weichs, CEO.
In the US has already seen a 44%leap in corporate insolvencies. Euler Hermes projects a rise of nearly 45%for 2008, and as much as 50% next year, for an ultimate total of nearly 62,000 companies going under.
The downturn in Japan will be less severe, with increases of 12% this year and 7.9% next year.
Western Europe will see a total of about 169,000 insolvencies this year (a 13.5% increase). The expected figure for next year is 197,000 (up 16.7 %), the company said. In the UK there will be 24.7% more bankruptcies this year and 34.2% more next year, for a total of 38,200.
Traditionally, the highest rates of corporate insolvencies have been in France, where the figure is expected to rise 12% both this year and next, to a total of about 62,700.
The bad debt risk is rising substantially for German companies too as business insolvencies are expected to rise 12%in 2009, to 33,800.
The increases in Italy are expected to be 10% in 2008 and 12.1% in 2009. For the Netherlands, Euler Hermes expects only a 10% increase this year, but a surge to 38.3% in 2009.
Some Eastern European countries are also facing critical changes. Bankruptcies will rise 20% next year in Hungary, to about 14,000, and 15% in the Czech Republic, to more than 1,500.
The Independent today reports that Euler Hermes has pulled credit insurance cover from suppliers to fashion group Peacocks.
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