Cyprus recorded one of the sharpest declines in new business registrations in the European Union in the second quarter of 2025, while also posting one of the steepest rises in bankruptcies, according to Eurostat. 

The number of new businesses created on the island fell by 8.4 per cent compared with the first quarter, placing Cyprus among the weakest performers in the bloc.  

Only Denmark, where registrations dropped by 18.2 per cent, and Germany, which saw a fall of 6.2 per cent, reported similar declines. 

At the same time, bankruptcy declarations in Cyprus rose by 66.8 per cent, the second-highest increase in the EU.  

Latvia recorded the largest rise at 70.7 per cent, while Slovakia followed with an increase of 20.1 per cent.

By contrast, several member states saw declines, including Estonia, where bankruptcies fell by 28.7 per cent, Spain with a fall of 8.3 per cent, and Sweden with a decline of 8.1 per cent.

Elsewhere in Europe, other economies reported strong growth in entrepreneurial activity. The Netherlands led the bloc with a rise of 57.7 per cent in new business registrations, while Spain recorded an increase of 27.6 per cent and Romania 19 per cent.  

These figures underline the diverging pattern between countries such as Cyprus and Denmark, where business formation contracted, and those like the Netherlands and Spain, where activity surged. 

Across the European Union as a whole, business registrations increased by 4.6 per cent in the second quarter, while the euro area recorded growth of 5.6 per cent.  

Both figures marked a recovery after the sharp declines seen at the start of the year. At the same time, bankruptcies in both the EU and the euro area rose by 1.7 per cent, reaching their highest level since at least 2018. 

Looking at sectors, registrations were strongest in transport, which rose by 13.1 per cent, in information and communication with an increase of 8.2 per cent, and in financial and insurance services, up 5.2 per cent, while industry remained broadly flat.  

In contrast, insolvencies were most pronounced in information and communication, which climbed by 13.6 per cent, and in construction, which rose by 8.1 per cent.  

On the contrary, accommodation and food services fell by 7.5 per cent, while trade dropped by 3.7 per cent. 

Eurostat’s business demography figures point to structural features of the Cypriot economy.

In 2022, the EU had 32 million active enterprises, of which 3.4 million were newly born, creating around 3.7 million jobs. The average enterprise birth rate stood at 10.5 per cent, with a death rate of 8.7 per cent.

Cyprus distinguished itself with one of the lowest enterprise death rates in the EU, at just 5.8 per cent. 

However, the island had one of the lowest shares of high-growth firms, at only 3.5 per cent, underlining limited entrepreneurial dynamism.  

By comparison, Lithuania posted one of the highest birth rates in the EU at 18.3 per cent, while Austria, Denmark and Germany all reported figures below 8 per cent. 

Eurostat stresses that quarterly data on registrations and bankruptcies are not directly comparable with annual statistics on enterprise births and deaths.  

Registrations capture the number of legal units entered in national registers during a given quarter, serving as an early indicator of business intentions.  

They do not necessarily translate into active businesses with turnover, employment or investment, which are the basis of annual enterprise birth statistics. 

Similarly, bankruptcy declarations reflect legal procedures started in a given quarter, but they do not always mean that a business has ceased operations.  

In some countries, firms declaring bankruptcy may continue trading under supervision, and some may recover.  

Annual figures on enterprise deaths, by contrast, only record companies that have dissolved all production factors. 

These methodological differences mean that registrations are best seen as a signal of intent, while bankruptcies are an early sign of stress in the business environment.