The vast majority of companies pay their invoices on time: "It is striking that the default rate in the region is still surprisingly low, despite a slight increase," explains Jörg Rossen, Managing Director of Creditreform Bonn. In addition, the companies in Bonn and Rhein-Sieg show above-average earning power. At the same time, growth is significantly weaker than in many comparable regions. The same applies to start-up activity: "Momentum is elsewhere, in the region here there is solid start-up activity, but less than in other relevant cities and regions.“

On balance, the region does quite well: "Overall, however, the companies in the Bonn/Rhine-Sieg region seem to be well equipped to cope with the challenges of the crisis from a position of relative strength," says Rossen. Creditreform compares the region with major cities such as Munich, Cologne, Frankfurt, Düsseldorf, Berlin and Stuttgart, but also with other medium-sized cities. It is true that well-founded economic figures have the disadvantage that they cannot be up to date, but as a rule reflect the situation a few months to a year ago, says Rossen. However, they have the advantage of allowing a deeper look at structures and correlations in medium- to long-term trends beyond short-term phenomena.

In the Bonn/Rhein-Sieg region, the proportion of companies that do not pay their invoices rose slightly again for the first time in 2021, according to Creditreform, after the so-called default rate had fallen continuously from 2013 to 2020. At 1.05 percent, however, it is still the second lowest since 2010 - despite the Corona pandemic. In contrast, the proportion of defaulted companies nationwide continues to decline; in 2021, it was 1.08 per cent. According to Creditreform, a company is considered to be in default if it is highly unlikely to be able to meet its payment obligations.

In terms of sectors, the default rate is highest in trade, hotels and restaurants, transport and storage at 1.5 percent, followed by construction at 1.26 percent. At the same time, two of the industries that are strongly represented in the region have a lower risk of default compared to the rest of Germany. This is true for the industry cluster arts, entertainment and recreation as well as for business service providers. In a comparison of cities and regions, the Bonn/Rhein-Sieg region is in a top position: in 2021, fewer companies defaulted on their payments overall than elsewhere - only Dresden did slightly better.

Average equity ratios fell in 2019, the latest data available, for the first time after several years of upward trend both in Germany and in the Bonn/Rhein-Sieg region. The equity capitalisation of local companies remains below the average for Germany as a whole, but the gap has narrowed again. Overall, local companies show significantly better earning power than the German economy as a whole: although the average return on assets fell to six percent, it is still nearly two percentage points higher than that for Germany as a whole.

In principle, the solidity of financing increases with a rising share of equity in total capital. This is because a high equity ratio improves a company's liability base, makes it less dependent on lenders and promotes liquidity. In contrast, return on assets is considered a measure of the return on the total capital employed in the company. Rising values show that a company is increasingly able to generate sustainable profits with the available assets.

The real gross domestic product (GDP) in Bonn/Rhein-Sieg increased by 1.9 per cent in 2019. The average annual growth rate since 2012 is 2.5 percent. This puts the local area only in the bottom third of the comparison regions. The region also performs poorly in per capita terms. Although the real per capita income has increased since 2012, in absolute figures (just under 45,700 euros) it only reaches eleventh place of the 15 comparison regions.

In recent years, the number of start-ups in Bonn/Rhein-Sieg has always been somewhat lower than in Germany as a whole. This trend also continued in 2021: the share of start-ups in the local business stock was 1.63 per cent, compared to 1.77 per cent for Germany as a whole. On the other hand, Bonn/Rhine-Sieg is much more resistant to failure than the rest of the country: only 2.05 percent of start-ups were unable to establish themselves, compared to 2.83 percent for Germany as a whole.

(Original text: Claudia Mahnke/Translation: Mareike Graepel)