Europe liquidations lower 2015

Europe experienced an overall reduction in liquidations in 2014 and 2015. Most noticeable were Spain where liquidations were 28% lower in 2014 compared to 2013 and down 25% in 2015 compared to 2014. In the Netherlands liquidations were 22% and 24% lower respectively.

Italy recorded 11% higher liquidations in 2014 (over 2013) and 1% lower liquidations in 2015. Portugal’s liquidations were 13% lower in 2014 but 12% higher in 2015.

In a sample of 11 European countries in 2015, the number of company liquidations was lower in 10 countries.

In Italy, 2015 liquidations began to decrease from the third quarter. This was due to the export sector having one of the highest levels of price elasticity in the Eurozone. The depreciation of the euro against the currencies of Italy’s trading partners was beneficial for Italy’s export companies.

Norway’s strong industry specialisation in oil and gas caused a significant increase in liquidations, until the summer of 2015. However, companies appear to have recovered by the end of the year with the number of liquidations down by 3%.

This was particularly the case in Norway in the construction sector where the number of liquidations fell 4.9% in 2015. The number of new housing projects
increased 14% in 2015 and construction permits rose 4%.

Construction benefited from the Norweigan Central Banks’s more accommodating monetary policy, which lowered its key rate twice in 2015 (0.75% since December 2015). Households are also investing more in property, despite the fact that, according to the OECD, prices are still too high.

In Germany, the situation remains positive. The country’s rate of unemployment is historically low, at 4.5% at the end of December 2015, while domestic demand is supported by household spending. The cycle of decline in insolvencies that began in October 2010 is continuing, with 61 consecutive months of registering a decrease in liquidations now registered.

The United Kingdom registered a 10% decline in the number of liquidations last year, but 2.2% higher in 2015. Households have taken advantage of low rates to take loans and increase their spending. Their savings rate has fallen significantly since 2010, from 11.9% to 4.4% in the third quarter of 2015 - compared with 15.5% in France.

In Portugal, the situation appears to be more delicate. The rate of insolvencies reversed in the second half of the year due to the difficulties encountered in the construction sector. Cement sales for construction, which are a leading indicator, have remained at historically low levels since 2013.

In addition, the rate of unemployment, down since 2013 at 17% and now stabilising above 12%, is still constraining household spending.