On Monday, the Financial Times published an analysis of data from various national statistics offices which showed that there has been a wave of corporate bankruptcies sweeping through the world’s business sector occurring at a rate not seen in decades.

In the US, business bankruptcies saw a 30% increase year over year in the 12 months through September. In Europe’s biggest economy, Germany, there was a 25% increase in reported bankruptcies between January and September, compared to the same period one year prior.

In the EU as a whole, the number of businesses declaring bankruptcy increased 13% for the nine months to September, compared to the previous year, reaching an eight year high.

France, the Netherlands, and Japan all saw more than a 30% increase in bankruptcies in October compared to the same month one year prior. In the OECD group of primarily wealthy states, some of the member states, including Denmark, Sweden, and Finland, the bankruptcy rates have now hit levels above those seen during the 2008 global financial crisis.

In addition, both England and Wales saw bankruptcies hit their highest levels since 2009 during the period between January and September of 2023.

Neil Shearing, chief economist at Capital Economics,  attributed the rising levels of bankruptcies to higher key rates, as well as self-liquidation of so-called zombie firms, which managed to survive the Covid pandemic only due to government support.

Now that the massive government support programs of the pandemic era for companies and households have been withdrawn, and central banks have been repeatedly increasing lending rates in an effort to rein in inflation, these weaker companies are being forced to close their doors.

According to Shearing, even if the rate increases of central banks have peaked, the trend driving these companies to bankruptcy will continue, as in the coming months, many of them will still have to refinance their debts at higher rates.