Swedish insolvencies spiked by 29 percent in 2023 — the highest since 1990s — after the property bubble burst.
Credit rating firm UC said December saw a 23 percent year-on-year rise in bankruptcies, which could indicate deeper economic issues, especially against the backdrop of sustained high inflation and interest rates.
“The slightly optimistic trend that we saw in the autumn, where bankruptcies seemed to stabilize, has now reversed, and the development has picked up speed again,” said Gabriella Goransson, CEO of UC.
Sweden's central bank has ended its 18-month run of interest rate hikes as the spetcre of recession looms in 2024.
Goransson stressed that previously healthy firms now faced financial challenges.
Major sectors including construction, retail and the hospitality industry are seeing fewer new start-ups than at any time in the past decade.
But the number of bankruptcies has not yet level of the 1990s recession because “today’s market is more global than it was then, and the crisis has hit more broadly,” Goransson said.
The Swedish government expects the economic upturn to be less robust in the upcoming year than earlier predicted.
Swedish Finance Minister Elisabeth Svantesson highlighted that public spending is expected to be conservative in early 2024 and forecast that unemployment would continue to rise.
“Despite some positive signs, 2024 will be a tough year in many ways… We expect more bankruptcies and layoffs next year. Demand for labor will be weaker than we previously expected,” Svantesson said.