Less indebted, CAC 40 companies face rising interest rates

Contrary to what one might think, CAC 40 companies have reduced their debts.

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Despite the Covid-19 crisis, the level of indebtedness of CAC 40 groups is at its lowest in 15 years according to a study by the firm EY. It must be said that they were supported by the state and in 2021, they enjoyed an exceptional recovery. This allowed them to clean up their balance sheets and reap significant profits: 158 billion euros in total according to the study.

Thanks to these results, large companies have been able to pay substantial dividends to their shareholders. At the end of 2021, 57 billion euros were distributed, this is a record. They have also invested a lot: 16% more investment in 2021

It is not sure that this will continue. The economic context is rapidly darkening due to the lasting rise in fuel prices. There is also the increase in the prices of materials which affects all sectors and inflation leads to a rise in interest rates. It’s the end of “cheap money”! In fact, this rise in rates is likely to encourage CAC 40 groups to limit their investments. Not to mention that the demands for salary increases are increasing, which is creating social tensions. These large companies will struggle to pay as many dividends as in 2021. The question of a better distribution of wealth will arise for them.

For now, there are no tax increases planned. In France, this is not on the agenda, unlike the United Kingdom, for example, where the energy giants are taxed to pay part of the aid paid to the poorest households. In France, the government plans to continue its policy of supporting economic circles. This requires a reduction in production taxes, for example, these taxes paid by companies. Promised by Emmanuel Macron, this boost does not seem to be in question. Unless the results of the legislative elections change the situation and the CAC 40 companies are put to work.

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