The number of bankruptcies in Sweden has risen to its highest level in a decade during the second half of 2022, according to the business and credit reference agency UC.
Between July and December 2022, 22 percent more bankruptcies were registered than in the same period in 2021, striking out hopes of a post-COVID recovery and the bout of optimism at the start of the year. As Sweden eased its pandemic-related restrictions, 2021 saw the lowest number of bankruptcies on record. The year 2022 also started on a high note, but the situation quickly deteriorated.
Among the year’s high-profile bankruptcies is ByggTema, the largest private construction company in the city of Orebro with a turnover of SEK 700 million ($67 million), followed by Lystra Personal Assistance in Stockholm and the clothing chain Indiska.
According to UC, nearly 3,500 companies filed for bankruptcy in the second half of the year alone, around 300 more than in 2013, when the previous record was registered. The share of bankruptcies was highest among hotels, restaurants and retailers, with the figures generally deteriorating each month.
The agency pinned the broadening bankruptcy crisis on the ongoing Ukraine conflict, the accelerating rate of inflation and the high electricity prices that ensued as a result of the EU’s ill-conceived sanctions against Russia, which only exacerbated Europe’s energy crisis. It also predicted a “tough 2023”, as smaller companies are in for “setbacks in liquidity as a result of increased electricity and purchase costs as well as interests.” Moreover, it envisaged a further rise in bankruptcies and a protracted drop in the number of startups.
“In hindsight, most things indicate that this is just the beginning,” UC economist Johanna Blome said in a press-release, predicting “increased and more long-term effects” from the conflict in Ukraine.
A similar take was shared by credit information company Creditsafe, which called the sharp increase (reaching 38 percent) in bankruptcies since the summer, “the start of a major bankruptcy wave.”
“The forecast is that bankruptcies will continue to increase in the coming years,” Creditsafe CEO Henrik Jacobsson said in a statement, citing piling debts. “Many companies that historically would have gone bankrupt survived the pandemic thanks to government support but with deferred tax liabilities that are creeping ever closer. Add to that higher interest costs, high electricity and fuel prices and a recession. We are in an uncertain environment with extremely many warning signals,” he concluded.
At the very end of 2022, the Swedish government said that the Nordic country was entering an enduring recession which was expected to last until 2025. The country's GDP is projected to shrink 0.7 percent, whereas unemployment is expected to grow to 7.8 percent in 2023 and to climb further to 8.2 percent in 2024.
