Weaker economic growth is expected to put an end to a three-year downtrend in German business insolvencies in 2008, Allianz's credit insurance unit Euler Hermes said on Tuesday.
Insolvencies in Europe's biggest economy would decline by 14 percent to 28,500 this year and stabilise at about that level in 2008, Euler Hermes predicted in a statement, adding that forecasts for 2008 were difficult because of planned revisions to Federal Statistics Office data.
Insolvencies have been falling in Germany since 2005 but remain on a high level, particularly among small and medium-sized companies, whose cash buffers are sometimes too thin with withstand tardy payment by customers, it said.
About half of German insolvencies in 2007 would be in service-sector businesses, and a further fifth each in retail and construction companies. Only 8 percent of manufacturers are expected to fail, it said. Euler Hermes said it expected insolvencies in western Europe overall to fall by 7.5 percent to 146,000 in 2007, and rise by 4.0 percent to 152,000 in 2008.