LONDON (Bloomberg) - Bankruptcies in Sweden soared for the seventh consecutive month in February amid declining household consumption and growing pressure on construction companies from an ongoing housing-market crunch.
A severe slump in Sweden’s real estate sector has damaged the Nordic region’s largest economy, which is struggling with surging consumer prices and growing interest rates. The country has been facing its worst housing-price plunge in three decades, which has led to a reduction in investments in new dwellings.
The situation has contributed to a surge in defaults in the country. According to the media outlet, citing credit reference agency UC, the number of bankruptcy filings in February jumped by 11% year-on-year. The retail and the motor vehicle trade industries were hit the hardest last month.
“The number of bankruptcies is still at a high level and has increased compared with last year,” UC economist Johanna Blome said in a statement, adding that there’s little optimism ahead as more rate hikes are expected while inflation isn’t slowing.
In February, the largest Swedish company that declared bankruptcy was air carrier Air Leap, with annual sales of 278 million kronor ($27 million), Creditsafe said.
The Swedish government announced at the end of 2022 that the country was entering a recession that would last until 2025.
The development reflects an EU-wide trend as the bloc teeters on the edge of a recession. In February, statistics agency Eurostat reported a wave of bankruptcies among EU businesses, which surged to the highest level in the fourth quarter of 2022 since records began in 2015.
Defaults jumped by 26.8% compared to the previous three months, Eurostat said, noting that “the number of bankruptcy declarations increased during all four quarters of 2022.”
The accommodation and food services industries were hit the hardest in the final three months of 2022 compared to the same period of 2019, with a 97.7% increase in insolvencies among EU businesses.