Bankruptcies across Belgium increased by more than 9% in the first quarter of this year compared to the same period in 2022, with Flanders registering a record number of companies declaring themselves insolvent.
According to a study published on Monday by market analysis firm Graydon Creditsafe, which was reported on by l'Echo, a total of 2,669 Belgian businesses declared themselves bankrupt in the first quarter of 2023 — 9.43% more than over the same period in 2022.
Among these businesses, a disproportionate number were based in Flanders. Belgium's Dutch-speaking region registered 1,622 bankruptcies in the first three months of this year: 19.17% more than over the same period in 2022, and 3.16% greater than the region's previous record, which dates back to 2014.
At the provincial level, Flemish Brabant experienced the greatest increase in bankruptcy filings, with 274 companies declaring themselves insolvent from January to March this year: 63.10% more than over the same period in 2022, and beating by some distance the province's previous quarterly record of 196, which dates back to 2020.
Among the sectors that were particularly badly hit were the construction and hospitality sectors, both of which registered record numbers of bankruptcies. The business services sector also experienced a precipitous increase (77.78%) in declared insolvencies relative to the first quarter of 2022.
Wallonia bankruptcies up; Brussels down
Remarkably, Wallonia experienced an even steeper increase in the number of declared bankruptcies than Flanders: Belgium's French-speaking region registered a 25.04% rise in insolvencies in the first quarter of this year compared to the same period in 2022.
However, Graydon Creditsafe also noted that, in terms of the absolute number of bankruptcies, the figure in Wallonia (674) still remains "remarkably low" — lower, in fact, than pre-pandemic levels.
Brussels, on the other hand, experienced a significant decline in the number of bankruptcies, with the country's capital registering a 29.63% fall in the first three months of this year compared to the same period last year.
Who, or what, is to blame?
Although neither Graydon Creditsafe nor l'Echo themselves suggested any reasons for the surge in bankruptcies, an examination of the available data strongly suggests that it was precipitated — or, at the very least, exacerbated — by Russia's full-scale invasion of Ukraine in February last year.
In particular, the invasion subsequently triggered a raft of EU sanctions on Russian industry and energy supplies, which led Moscow to retaliate by restricting its energy supply to Europe, thereby causing energy prices to soar.
Owing to Ukraine's status as the world's breadbasket, the war has had a profound impact on food prices across Europe and much of the rest of the world. Last month, Belgium recorded a food inflation rate of 17.02%, up from 16.12% in February.
Notably, Belgium is not the only country to have experienced a steep increase in bankruptcies in recent months: according to a study published in February by Eurostat, the EU's official statistics office, bankruptcies across the bloc have now soared to record levels.
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Belgium's increase in bankruptcies was specifically predicted by Graydon Creditsafe earlier this year. "The economic shock of Covid-19 has not yet been fully digested, while the shocks of energy prices and wage indexation are looming," Eric Van den Broele, the Director of Research at Graydon Creditsafe, explained in early January. He added that he expected a "wave of closures" over the coming months.
Graydon Creditsafe's analysis was further corroborated by the results of a poll published at the end of last year, which found that three-quarters of Belgian independent retailers feared bankruptcy over the coming months. Shopkeepers attributed their financial difficulties to multiple factors, including soaring energy bills, government-mandated wage indexations, and general inflation.
