Economy: how to explain that business failures are on the rise again in France

According to the Altares study, the increase in business failures is significant: 49% more compared to the same period last year. This figure comes after an already dismal first quarter with a 35% increase in bankruptcies. In fact, insolvencies mainly started at the end of last year, and since February their pace has accelerated.

This is due to the start of the war in Ukraine, which is shaking up the economy, but also to the gradual abolition of aid. Over the past two years, companies very rarely put the key under the door, because they were on a drip thanks to all the government support systems: state-guaranteed loans (PGE), partial unemployment, deferrals social contributions. There, we return to a slightly more normal pattern. Especially since companies today have to repay loans: however, they do not always have the cash for it, nor the sufficient activity.

Among the sectors that toast the most, is trade. For clothing, for example, the sector was already in bad shape before the Covid-19. And the crisis gave him the coup de grace. Catering also had a hard time picking up, especially the so-called “seated” catering, known as traditional. It faces competition from delivery or take-out, because with the pandemic, consumption patterns have changed. We can also mention hairdressing, beauty. The frequency of visits is slowing down, but this is more because of inflation. The French cut corners on this type of expenditure. Construction too, but this is due to increases in materials, supply difficulties.

Officially, there is no question of falling back into “whatever the cost” but with growth which is weakening, inflation which is setting in, tensions on wages or even the prospect of seeing too many companies closing their doors is pushing the executive to change its line and be more flexible.

For example, a few months ago, if he did not want to touch the state-guaranteed loan system, except in the most strategic cases, Bercy could allow banks to review maturities, or convert debt into capital.

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