After a strong rise in 2001 due to the bad economic situation, the Euler Hermes Global Insolvency Index shows a 2.9 percent decrease in 2003 which is expected to continue at the same pace, -3.3 percent, this year but which should slow down in 2005 (-1 percent). These fluctuations are in line with the growth of the global economy, which after a sharp acceleration in 2003 should hit its peak (+3.9 percent) this year, before slowing down in 2005 (+3 percent).

The Global Insolvency Index allows a comparison of corporate insolvencies between countries after adjusting for problems linked to different national definitions and taking into account the economic size of each country.

In Europe, insolvencies are expected to rise slightly (+1 percent in 2004 and 2005) due to less economic growth.

In the United States and Japan on the contrary, insolvencies are expected to continue their fall in 2004 (by 5 percent and 14 percent respectively) and in 2005 thanks to a strong economic growth.

However, the figures of early 2004 show that the contrast between American and European bankruptcies is subsiding. The decrease in American bankruptcies (-9 percent in 2003) seems to be slowing down and should not be higher than 5 percent this year whereas the increase in solvencies is slowing down in Europe (+7 percent in 2003), especially in France (+2.5 percent on average during 12 months in May 2004).

Nevertheless, in some countries the increase remains high (+30 percent of failures in the Netherlands on average during a 12 month period ending March 2004).

American companies have benefited from the economic growth, from fiscal measures as well as from cost reductions applied since 2002. The number of bankruptcies fell by 9.1 percent in 2003. They are forecast to decrease by 5 percent in 2004 and by 4 percent in 2005 down to 32,000 failures, a historic low since 1980.

The strong return of economic growth after 10 years of stagnation has allowed bankruptcies to fall dramatically in 2003 (-15 percent), a decrease that should continue in 2004 (-13.6 percent), down to 14 000 failures. In 2005, however, the fall should be less dramatic (-2.5 percent).

In France, insolvencies are expected to fall in 2004 and in 2005. Failures have increased by 11.7 percent in 2003 in a stagnating economic climate. The recovery of the economy (a 2.1 percent growth of GDP is expected for 2004), should result in a 2 percent decrease of the number of failures, down to 47,000, and a 1 percent fall in 2005. The figures for the first months of 2004 are encouraging: based on a 12 month period, the increase is slowing down (+2.5 percent) as of May 2004. However, in 2005, insolvency statistics might be affected by new procedures coming into effect following the reform of the national bankruptcy law.

After a 4.6 percent increase in 2003 in Germany, the number of bankruptcies is expected to rise by a further 3 percent this year, reaching the number of 40,000 failures, whilst the economy is having difficulty in recovering. Bankruptcies have thus doubled over a 10 year period.


In the United Kingdom, individual bankruptcies will go up, corporate insolvencies will go down. In 2003, insolvencies have increased by 7.7 percent, and are expected to rise by another 2 percent this year before stabilising at more than 51,000 failures in 2005. Individually-owned business insolvencies account for more than two-thirds of the total number of failures and will continue to rise whereas corporate insolvencies continue to fall.

Euler Hermes is the world leader in credit insurance, an integrated factoring group in Europe and a leader in bonding and guarantees. With 6,000 employees operating in 36 countries, Euler Hermes holds 36 percent of the global market for credit insurance and offers a comprehensive range of services for the management of trade receivables.

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