German business closures surge as economy battles stagnation, aging

Nearly 190,000 German companies ceased operations in 2025, marking a roughly 10% increase from the previous year and the second consecutive significant annual rise, calculations by the ZEW institute and creditors’ protection association Creditreform confirmed.

The figures highlight the mounting pressures facing Europe’s largest economy, where years of stagnation are being compounded by an aging population, skilled-worker shortages and rising operating costs, Bloomberg reports.

Only about one in eight business closures was linked to insolvency, suggesting that an increasing number of otherwise viable companies are shutting down for other reasons, including a lack of successors willing to take over.

“The renewed rise in the number of business closures shows that the pressure on the German economy to adapt has continued to increase,” ZEW researcher Sandra Gottschalk said.

“Demographic trends are becoming increasingly significant. More and more companies are closing because their owners are retiring and can’t find successors, even though these companies would otherwise be viable,” she added.

The trend underscores the broader impact of Germany’s prolonged economic malaise. After years of stagnation and repeated setbacks, Chancellor Friedrich Merz’s government has sought to revive growth through major spending and reform packages.

Meanwhile, continued job-cut announcements in the country’s flagship automotive industry, partly driven by intensifying competition from Chinese manufacturers, have further weighed on business sentiment. The economy has also been affected by low water levels on the Rhine River and a surge in energy costs linked to the Iran conflict.

Although around 11,000 industrial companies closed last year, the data show that economic difficulties extend well beyond manufacturing. The hospitality and healthcare sectors also recorded increases in business closures of more than 10%.

“Large companies and corporations are currently dominating the news,” Creditreform spokesman Patrik-Ludwig Hantzsch said. “However, the number of small and medium-sized businesses that are quietly disappearing is many times greater.”

By Vafa Guliyeva