FirstFT: Bankruptcies rise at double-digit rates in most advanced economies

Stay informed with free updates

Simply sign up to the World myFT Digest — delivered directly to your inbox.

Good morning.

Corporate bankruptcies are increasing at double-digit rates in most advanced economies as borrowing costs rise and governments unwind trillions of dollars worth of pandemic-era support for struggling businesses.

Following a decade of decline the number of US corporate bankruptcies rose 30 per cent in the 12 months to September compared with the year-ago period, according to courts data.

Germany, the EU’s largest economy, said bankruptcies rose 25 per cent from January to September compared with the year-ago period. Since June, monthly “double-digit growth rates have been consistently observed compared to the previous year”, the country’s statistical office Destatis said on Tuesday.

Across the bloc, corporate insolvencies rose 13 per cent year on year in the nine months to September to reach their highest level in eight years, according to Eurostat. Here are the industries suffering the most.

Here’s what I’m keeping tabs on today:

• Germany: The Ifo Institute publishes its business climate survey.

• Egypt: Abdel Fattah al-Sisi is expected to win a third term as results are announced in the country’s presidential election.

• Jimmy Lai: The Hong Kong media mogul and prominent critic of the Chinese Communist party is being tried under a sweeping national security law and could face life in prison if found guilty. UK foreign secretary David Cameron said he was “gravely concerned” about the “politically motivated prosecution”.

Five more top stories

1. Exclusive: PwC is asking audit regulators around the world to loosen rules on independent board members as it is running into problems finding experienced candidates who meet strict requirements against conflicts of interest. The Big Four firm is seeking to improve its governance following a scandal at its Australian business. Read the full story.

2. European buyout firms raised pay for staff this year despite the toughest market conditions in more than a decade, underlining the resilience of the industry’s lucrative business model. Salaries rose by at least 6 per cent across ranks of employees, an annual survey by headhunter Heidrick & Struggles has found. Here’s how private equity managed to hand out bigger rewards.

• Pay gap: The onset of the cost of living crisis did nothing to narrow the gap between chief executives’ pay and average earnings at the UK’s top listed companies, new analysis has shown. 

3. The UK, Germany and France stepped up calls on Israel for a ceasefire yesterday, as Israeli protesters urged Prime Minister Benjamin Netanyahu to negotiate another hostage release deal with Hamas. Israel has seen some of its most significant demonstrations since the war started, after its army admitted on Saturday that it had shot and killed three Israelis in Gaza who were presumed to have escaped from Hamas captivity. Here’s the latest on the war.

• ‘Gaza metro’: The Israeli army has taken journalists to see a “flagship” Hamas-built tunnel, part of a network estimated to be as long as 500km and bigger than the London Underground.

• The FT View: Israelis deserve a leader better than Netanyahu, and one who can see that a secure future for the Jewish state lies in a settlement with Palestinians, writes the FT’s editorial board.

4. The head of the IMF has urged Ukraine’s allies to rapidly unlock tens of billions of dollars for the country, as she warned that delays in providing the extra funding would jeopardise Kyiv’s tentative economic recovery. Kyiv can manage a likely short-term funding gap of “a couple of months”, Kristalina Georgieva said in an interview.

• War in Ukraine: Leaders of EU countries have been left brainstorming ways to stop Hungary’s Viktor Orbán from blunting the bloc’s support for Ukraine after he blocked €50bn in aid last week.

• Opinion: Western leaders who led their people to believe the war would be easier than it is are to blame for rising “Ukraine fatigue”, writes Martin Sandbu.

5. Exclusive: The UK’s NHS will pioneer drone deliveries in a bid to cut costs and improve services. Silicon Valley-based Zipline, the world’s largest drone logistics service, expects to deliver medical and surgical supplies to more than 30 NHS hospitals and clinics in the north of England in the second half of next year. Here’s how this could help cut delivery times.

News in-depth

The story of 2023 has been one of near stagnation for the UK economy — confirmed last week by the 0.3 per cent drop in gross domestic product between September and October. That left output no higher than in January. Activity is forecast to remain tepid next year with high borrowing costs and the legacy of the worst inflationary upsurge in a generation weighing on the economy. While many see it as a lost year, some analysts say it could have gone even worse.

We’re also reading . . . 

Chart of the day

The number of core participants at COP28 in Dubai topped a record 65,000, an increase of 80 per cent on the flagship UN climate summit’s event last year in Sharm el-Sheikh, Egypt.

Take a break from the news

Mispronouncing a colleague’s name at work can be hazardous — and not just if it’s the boss. Read FT columnist Pilita Clark on the perils of mangling a name and what one group is doing to correct it.

Additional contributions from Benjamin Wilhelm