Czech Business Bankruptcies Soar to 7-Year High as German Crisis Bites

Czech Corporate Bankruptcies Hit Seven-Year Peak, Fueled by German Downturn

Prague —The Czech Republic is facing a severe corporate crisis, with business bankruptcies soaring to their highest level since 2017. By November 2025, a total of 633 companies have filed for insolvency, underscoring a perfect storm of economic pressures stemming from high borrowing costs and a severe industrial slump in its key partner, Germany.

The capital city of Prague is the epicenter of this wave, accounting for 283 insolvencies, with the critical industrial hubs of South Moravia and Moravian-Silesia also hit hard.

The Triple-Threat Crushing Czech Businesses

A combination of three powerful factors is driving the surge, with small and medium-sized enterprises (SMEs) bearing the brunt:

1. The German Industrial Recession: As the backbone of the Czech export economy, the manufacturing and automotive sectors are tightly linked to Germany. The steep decline in German industrial orders has created a direct revenue shock for Czech suppliers and subcontractors.

2. The Credit Squeeze: The Czech National Bank's policy of maintaining high interest rates has made credit prohibitively expensive. Businesses are struggling to refinance debt or secure new loans, crippling cash flow and halting investment.

3. The End of Pandemic Support: The withdrawal of government subsidies that kept companies afloat during the COVID-19 pandemic has revealed fundamental weaknesses, pushing many fragile firms into insolvency.

A Wider European Crisis

The situation in Czechia is not isolated but reflects a broader, worsening trend across the European continent, now in its fourth year of rising corporate failures.

• The German Multiplier: Germany's own escalating insolvency problem, driven by its manufacturing recession and high energy costs, acts as a direct drag on the Czech economy. The health of the German industrial sector is a leading indicator for Czech business stability.
• Monetary Pressure Across the Eurozone: The delayed impact of the European Central Bank's interest rate hikes continues to strain businesses in major economies like France and Italy, sustaining high insolvency rates.
• Vulnerable Sectors: Continent-wide, the construction, retail, and transport/logistics sectors are failing at the highest rates. In Czechia, construction and retail trade are among the most severely affected, highlighting the pressure from reduced consumer spending and expensive financing.

Outlook: The record bankruptcy levels in the Czech Republic signal a painful economic recalibration. For Czech businesses, recovery is inextricably linked to a revival of German industrial demand and a future easing of monetary policy, leaving many SMEs in a precarious position for the foreseeable future.