High number of businesses bankruptcies overwhelming Sweden

The bankruptcies of companies, shops, restaurants and others in Sweden have reached an unprecedented record high due to the inflation crisis and rising prices according to 2022 data.

The Swedish Credit Intelligence Agency showed that the number of bankruptcies in the country reached its highest level in 10 years during the second half of last year.

The number of cases during last December alone increased by 17% per month, while the number increased by 5% compared to the same month of the previous year.

In the same context, Bloomberg stated that the increase in the number of bankruptcies during the past month came after a significant increase in bankruptcy cases during last November, as the retail, restaurant and hotel sectors led the increase in bankruptcy cases, while bankruptcy cases increased in the retail trade sector by 28% during the past month, and in the restaurants and hotels sectors by 29%.

Bloomberg economic analyst Johanna Bloom said that there are many indications that this is just the beginning and that the current year will witness a new rise in bankruptcies, adding that many companies will face a difficult year in 2023, as well as small companies.

In particular, a liquidity crisis due to the high prices of electricity and operating requirements, in addition to the high interest rates.

The data revealed how fast inflation, the rising cost of electricity and the impact of the war in Ukraine were hurting businesses in the Nordic countries’ largest economy, as consumers were forced to cut back on spending on non-essential services.

The most affected sectors included retailers, restaurants and hotels, with insolvency cases reaching nearly 30% in December.

It’s widely expected that the Swedish economy will contract in 2023, as the outlook for the deterioration of the macro economy has led to scrambling by the governments of the Nordic countries to search for ways to mitigate an inflationary crisis that will affect companies and individuals alike.

Companies will be allowed to defer tax payments for several months, and the government will look for ways to compensate companies for rising energy costs without breaching EU subsidy rules.