Eurostat, the European Union's statistical office, has published data for the second quarter of 2025. The data shows mixed trends in the EU economy. The number of new business registrations in the EU increased by 4.6% compared to the first quarter, reaching the highest level in six years. Conversely, the number of bankruptcy filings increased by 1.7%, also reaching a historic high since 2018.
In Cyprus, there was a decline in new companies and a sharp rise in bankruptcies
The situation in Cyprus was particularly contrasting. While the Netherlands, Spain, and Romania experienced significant growth in new business registrations, Cyprus saw an 8.4% decline during the same period. This is one of the worst results in the EU, second only to Denmark.
At the same time, Cyprus was among the leaders in the bankruptcy segment. The number of insolvency filings increased by 66.8% compared to the previous quarter, the second-largest increase in the European Union after Latvia. Economists note that such jumps are particularly noticeable in the statistics of a small country, even if we are talking about only tens or hundreds of companies in absolute terms.
Economic sectors under pressure
In the first quarter of 2025, bankruptcies increased in nearly all Cypriot economic sectors, including hotels and restaurants, IT services, education, and social services. Transportation companies were the only exception, with a decline in the number of closures.
In the second quarter, however, the trend reversed, with an increase in bankruptcies recorded in information technology, construction, and transportation, as well as education and social services. A decline was observed in tourism, trade, financial services, and industry. Despite these fluctuations, Cyprus's overall level of bankruptcies remains higher than before the pandemic.
Business registration dynamics
According to Eurostat, most sectors of the Cypriot economy saw a renewed increase in registrations in the second quarter of 2025, except for manufacturing, where figures remained unchanged. The most activity occurred in transportation, IT, and the financial sector. Despite the overall upturn in these areas, the level of new registrations is still below the pre-crisis level of late 2019 in a number of sectors, especially trade, construction, and the hotel and restaurant industry.
What does this mean for Cyprus?
The rise in bankruptcies and decline in new companies point to instability in the business environment on the island. For Cyprus, whose economy depends heavily on tourism, services, and international investment, these trends may indicate the need for urgent measures to support small and medium-sized businesses. In the coming quarters, economic experts predict that the key to recovery will be the country's ability to adapt to digitalization, attract foreign investors, and develop high-growth sectors, such as fintech, IT, and logistics.