Bankruptcies in Belgium have surged to their highest levels since 2018, as soaring energy prices and government-mandated wage indexations render businesses increasingly incapable of avoiding financial collapse.
According to a study published on Thursday by Statbel, Belgium's official statistics office, a total of 1,092 bankruptcies were registered in June: a 26.4% increase compared to May, and more than any month since October 2018.
All of Belgium's regions registered an increase in insolvencies from May to June. Flanders was especially badly hit, with bankruptcies in the country's Dutch-speaking region reaching their highest levels since October 2013. Flanders also posted an all-time record for bankruptcies over the first six months of the year, beating its previous record (set in 2013) by 7.6%.
Agriculture and fisheries were the only sectors not to register an increase in bankruptcies from May to June. Insolvencies over the first six months of the year in the construction and transportation sectors also both reached record levels.
Forecast foreclosures
The study's findings were hardly unexpected, with numerous recent studies having predicted a sharp increase in insolvencies this year.
One study published in January by market analysis firm Graydon Creditsafe forecast an imminent "wave of closures" across Belgium. "The economic shock of Covid-19 has not yet been fully digested, while the shocks of energy prices and wage indexation are looming," explained Eric Van den Broele, Graydon Creditsafe's Director of Research.
The firm's analysis was corroborated by the results of a poll published at the end of last year, which found that three-quarters of Belgian independent retailers feared bankruptcy over the next few months. Shopkeepers attributed their financial difficulties to multiple factors, including soaring energy bills, government-mandated wage indexations, and general inflation.
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Imminent bankruptcy is not only major concern facing Belgian businesses, with many now also fearing declining competitiveness caused by skyrocketing energy prices. Last month, the Federation of Belgian Companies (FEB) found that 80% of Belgian businesses are paying two-and-a-half times more for energy than they were at the beginning of 2022.
"The competition with the United States is tough," FEB Chief Economist and study co-author Edward Roosens told l'Echo. "There the gas price is €12 per megawatt hour (MWh), compared to more than €30 per MWh with us."
High energy prices across Europe also mean that the continent as a whole has suffered a steep increase in bankruptcies in recent months: according to a study published earlier this year by Eurostat, the EU's official statistics office, bankruptcies across the bloc have now soared to record levels.
