International

Nearly 190,000 Businesses Shut Down in Germany Amid Economic Pressures

21 August 2026 19:08 PM

NEWS DESK

Nearly 190,000 businesses in Germany, Europe’s largest economy, have closed their operations over the past year amid economic uncertainty, rising production and operating costs, and a shortage of skilled workers.

The number of business closures increased by more than 10 percent compared with the previous year, according to a joint report by the Leibniz Centre for European Economic Research (ZEW) and credit rating agency Creditreform.

The report said several factors are putting increasing pressure on Germany’s business sector, including US tariff policies, growing competition from cheaper Chinese products, and rising electricity and labor costs.

Many businesses are struggling to remain viable under these conditions. The report noted that companies are not closing only because of financial difficulties; many are voluntarily winding down operations before reaching the point of insolvency. Some financially stable businesses are also choosing to shut down after assessing future risks.

Germany’s hospitality sector, including hotels and restaurants, has been particularly affected. Around 15,000 businesses in the sector closed in 2025, marking a 15 percent increase from the previous year.

The healthcare sector also recorded a significant number of closures, with around 11,000 businesses shutting down last year.

Among them, the number of medical practices and clinics that closed because doctors retired or replacements could not be found rose by 23 percent, reaching approximately 5,500.

Economists say the actual scale of the problem may be more concerning than the official figures suggest. Only around 13 percent of all business closures resulted from formal insolvency proceedings. This means the vast majority of businesses shut down voluntarily by decision of their owners.

The succession crisis is becoming a major challenge, particularly for family-owned businesses. According to the report, around 29 percent of such businesses closed because their aging owners retired and no suitable successors were available to take over.

Analysts warn that Germany’s small and medium-sized businesses could come under even greater pressure if high operating costs, shortages of skilled workers, international competition and economic uncertainty persist.

The trend could pose an additional challenge to Germany’s already struggling economy, particularly as businesses face growing pressure to remain competitive in an increasingly difficult global market.

economic uncertainty Germany