The number of bankruptcies in Denmark is expected to rise by 7 per cent next year.
That is the assessment from credit insurance company Atradius, which points out that this year’s sharp decline has been greater than economic indicators alone can explain.
Denmark is therefore one of only two European markets examined where the company expects bankruptcies to increase in 2027. In the construction sector, particular attention is being paid to companies taking on their biggest project to date.
A large contract can secure work well into the future, but at the same time make a company’s finances more vulnerable, explains Yasir Al-Gailany, senior underwriter responsible for the construction sector at Atradius.
- Companies with a large share of their business tied to one major construction project typically face greater risk than companies with a broad portfolio of smaller contracts. When a single project accounts for a large part of the order book, delays, disputes or cost overruns can quickly have major consequences for both liquidity and earnings.
That warning is particularly relevant in an area with major infrastructure projects such as the Fehmarn construction project. According to Statistics Denmark, construction accounted for 20 per cent of jobs in Lolland Municipality in November 2024, compared with 6 per cent nationwide. In Guldborgsund and Vordingborg, the figures were 9 and 11 per cent respectively.
The problem arises when a company has so much tied up in a single contract that it has less resilience if the project is delayed or becomes more expensive to complete than expected.
Large projects are complex, and changes and unforeseen costs are, according to Yasir Al-Gailany, almost unavoidable.
- It is often the contractor that ends up carrying a large share of the risk. Many of the bankruptcies we have seen in the industry have stemmed from a major project that, in one way or another, went off track.
