In Scandinavia as a whole, the risk of bankruptcy was extremely low during the pandemic years, especially in 2021, when both Sweden and Norway showed the lowest number in the last five years. Many companies survived thanks to state support packages. The increase in bankruptcies then began in Denmark already in early spring 2022, while Sweden and Norway's increase only hit full force in 2023. This is what Creditsafe Danmark writes in a press release.
The percentage increase in Denmark is therefore not as strong in the past year. In Norway, bankruptcies in 2023 were at the same level as before the pandemic, while both Sweden and Denmark are well above. In both Sweden and Norway, bankruptcies increased evenly throughout all months of last year. A trend that looks set to continue in 2024.
- It is remarkable to see that the number of bankruptcies in Denmark for 2023 has reached the highest number of bankruptcies since 2010 and exceeded 1000 bankruptcies in one month for the first time ever. This development reflects a challenging economic time, where companies face unique challenges and need for adapted strategies to ensure their future success, notes Morten Kofoed-Larsen, country manager at Creditsafe Denmark.
However, at Creditsafe in Sweden, the director assesses that the poor development will continue this year.
- It is a gloomy development that we are seeing so many bankruptcies throughout Scandinavia. The countries have a similar increasing trend, and the worse economic times with inflation, rising interest costs and reluctant households have hit all three countries hard. Our assessment is that high bankruptcy rates will characterize most of 2024, says Henrik Jacobsson, CEO of Creditsafe Sweden.
Here are the hardest hit industries
A common trend in Scandinavia is large increases in bankruptcies within the construction and construction sector, retail trade and the restaurant industry. Within construction, Denmark notes an increase of 10 percent - while Sweden and Norway experienced an increase of 38 and 29 percent. Since Denmark's bankruptcy rates began to increase already in 2022, the percentage increase is not as strong compared to Sweden and Norway.
In the brother country against Creditsafe's country manager an explanation for that.
- The construction and construction sector has always been one of the largest bankruptcy industries. Last year, it was not only the industry with the most bankruptcies, but also where we saw the most significant increase, and it does not only affect small businesses. Throughout the year, we have seen that several major contractors have had to close due to interest rate increases, economic uncertainty and a significant decline in orders and the start of new construction projects, says country manager at Creditsafe Norway Per Fjærestad.
When it comes to bankruptcies in relation to the number of companies, the risk of bankruptcy is highest in Denmark.
While bankruptcies are increasing in all three countries, Denmark has the highest proportion of bankruptcies in relation to the number of active companies in the country and thus the highest risk of bankruptcy. In Denmark, a total of 1.41 percent of all Danish limited liability companies and limited liability companies went bankrupt, compared to 1.08 percent of Swedish limited liability companies and only 0.79 percent of Norwegian limited liability companies.
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