According to a new report from Bloomberg, in February, bankruptcies soared in Sweden, marking the seventh consecutive month to see insolvencies increase, as household consumption declined, and construction companies felt growing pressures from the ongoing housing market crunch.
The Nordic region’s largest economy has been hit hard from an ongoing slump in Sweden’s real estate sector which is laboring under rising interest rates, and surging consumer prices for everything else people are buying. The result has been the nation’s worst housing price plunge in 30 years, which has hit the construction sector hard, as demand for new houses has plummeted.
This has produced a wave of defaults in the country. Bloomberg reported that according to credit reference agency UC, in February, the number of bankruptcy filings jumped 11% year over year. The hardest hit last month were the motor vehicle and trade industries.
UC economist Johanna Blome said, “The number of bankruptcies is still at a high level and has increased compared with last year,” adding that the fact rate hikes are now expected, as inflation continues to remain unaffected is sapping optimism.
The largest Swedish company to declare bankruptcy in February was Swedish air carrier Air Leap, with annual sales of 278 million kroner, ($27 million), according to Bloomberg’s report.
At the end of 2022, the Swedish government announced the nation was entering a recession, which was projected to end in 2025.
The trends in Sweden mirror what is going on in the broader EU bloc, which is teetering at the edge of a broader bloc-wide recession. In February, statistics agency Eurostat reported that in the fourth quarter of 2022, bankruptcies among EU businesses rose to the highest level seen since the records began being kept in 2015.
Defaults rose by 26.8% quarter over quarter, with Eurostat noting, “the number of bankruptcy declarations increased during all four quarters of 2022.”
The hardest hit in the fourth quarter of 2022 were the accommodation and food services industries, which saw a 97.7% increase in insolvencies among EU companies, compared the the same period in 2019.
