Challenging economic and political environment creates headwinds for the year ahead

Against this backdrop the rate of bankruptcies in the U.S. rose to a 14-year high in 2024, although there is hope that a wave of deregulation under the new Trump administration will reverse the trend in the year ahead.  

The global picture looks more challenging, with the looming threat of tariffs from the U.S. creating considerable unease among governments across the world.

The sudden imposition of new trade barriers by its biggest export market could prove particularly challenging for Germany, with the country’s central bank estimating that such a move could cut up to 1.4% from GDP between now and 2027. 

Germany, which is facing federal elections this year, is already “the most distressed market in Europe”, with the Bundesbank in December 2024 cutting its growth forecast for 2025 to 0.2%, down from 1.1% six months earlier. Germany’s labor market is showing significant signs of weakness, with unemployment currently at 6.1%, a four-year high. 

Several sectors globally are facing headwinds, including brick-and-mortar retail, which remains under pressure from e-commerce and the long-tail impact of the COVID-19 pandemic. 

Car-makers and suppliers are facing similar market disruption, particularly in Europe where many of the Continent’s biggest brands are struggling to compete with Chinese rivals who are further ahead with the development of battery electric vehicles. 

We are also seeing more restructurings in the European clean energy sector, with heavily leveraged solar, wind and battery solutions providers hit by falling energy prices, rising input costs and difficulties in scaling their innovations.