Germany’s 700,000 ‘zombie companies’ spark economic debate over survival and risk
The debate over so-called rob zombie companies in Germany has taken a sharp turn. Marcel Fratzscher, head of the German Institute for Economic Research (DIW Berlin), initially dismissed their existence—but now admits up to 700,000 firms may fit the description. These struggling businesses rely on state aid or suspended insolvency rules to stay afloat, raising questions about their long-term impact on the economy.
Fratzscher originally claimed Germany had no zombie companies. He even questioned whether a quarter of all firms should be forced into bankruptcy. But his stance shifted after studies, including those by Creditreform, highlighted a growing share of low-profitability businesses unable to cover costs. While no specific firms were named, recent insolvencies in Austria—such as Hygiene Austria and Weiss GmbH—mirror the traits of zombie companies.
The discussion around zombie companies now includes both their risks and potential benefits. If these firms fail, some economists believe it could free up resources for innovative small business ideas and better-paying jobs. Meanwhile, Fratzscher’s evolving stance keeps the focus on government support as a lifeline for struggling businesses.
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