Will a wave of bankruptcies of weakened companies, suspected to happen once state aid is gone, actually take place? Not necessarily, at least according to the latest study by Euler Hermes, a subsidiary of the Allianz insurance group.

After two years of decline, -12% in 2020 and -6% expected in 2021, bankruptcies around the world should rise again in 2022, by 15% in one year. However, they should remain at lower levels than before the crisis, at an average of -4%. The 2022 increase is considered inevitable. “Thanks to state support measures, the number of bankruptcies reached a historically low level during the coronavirus crisis. This situation is gradually coming to an end,” says Euler Hermes. The Allianz subsidiary estimates that one in two bankruptcies in Western Europe and one in three in the United States were prevented by the support.

The United States and Asia should see fewer bankruptcies in 2022 than in 2019. But this will certainly not be the case for Africa, which is expected to be “well above pre-crisis levels” from 2021. The same goes for Central and Eastern Europe and Latin America in 2022.

Statistical differences

For Luxembourg, the recovery in bankruptcies is expected from 2021, with an estimate of 1,350, i.e. +3.5% compared to the 1,304 of 2020. However, it will be more moderate in 2022 than at world level, at +7.4%, or 1,450 bankruptcies. Euler Hermes indicates levels roughly similar to those before the crisis: 1,356 bankruptcies in 2018 and 1,445 in 2019.

, which announced 1,168 bankruptcies in 2018, 1,239 in 2019, and 1,206 in 2020. When asked about its calculation method, the insurance company explains that it takes into account the openings of bankruptcies and bankruptcies reported on the website of the Trade and Companies Register, whereas the national statistics institute deducts the reported bankruptcies of the judicial procedure “judgments and declarations of bankruptcy” from the sum of the openings of bankruptcies.

Risks in trade and energy

In France, Euler Hermes forecasts a 17% drop in bankruptcies in 2021 and a 39% drop in 2022, to reach a level 39% lower than in 2019. In Belgium, it expects bankruptcies to rise by 2.7% in 2021 and then by 10% in 2022, with a level of bankruptcies still 23% lower than in 2019. These figures are better than elsewhere in Europe, which the insurance company explains by the major support programmes or their extension over time.

However, the insurance company points to two sectors at risk in Benelux: wholesalers, affected by the disruption of supply chains, and the energy sector, due to .

This story was first published in French on . It has been translated and edited for Delano.