Business failures are on the rise in France in 2023

Nearly 58,000 legal recovery procedures were opened last year, with an acceleration in recent months, to the point of making the fourth quarter one of the worst recorded in thirty years.

Business failures are more numerous in France in 2023, this is shown by the latest figures, published on January 18, from the Altares firm, specializing in the study of data on the functioning of businesses. A company is said to be in default, or filing for bankruptcy, when legal recovery proceedings are initiated against it, generally when the company concerned can no longer meet its debts.

These failures fell to historically low levels in 2020 and 2021. But since then, they have started to rise again with 57,729 files opened in 2023, an increase of 36% over one year. The fourth quarter alone sets a record for three decades, with 16,820 applications submitted in the space of three months. According to Altares, most of these failures reflect a catch-up after the massive public support for businesses during the Covid pandemic. The gradual exit from “whatever it takes” is followed by the harsh return to the reality of an unfavorable situation.

Tens of thousands of jobs at risk

After having been held at arm’s length by public money, businesses are finding themselves in a difficult economic environment, with a rise in the price of raw materials, inflation, sluggish consumption, still high interest rates and a situation tense international geopolitics. Another element is added to the list of difficulties: the repayment of state-guaranteed loans (PGE), granted during the pandemic. The most affected are small and medium-sized businesses (SMEs), which represented 92% of insolvency files last year.

The construction and real estate sectors are the most affected. These two sectors represent a quarter of bankruptcies in 2023. And the resulting consequences on employment are significant. All sectors combined, according to the economic studies department of Banque Populaire Caisses d’Epargne (BPCE), 240,000 jobs would be threatened by the failures of companies recorded in France. For reference, 200,000 jobs are approximately what the French economy is supposed to create, per year, to achieve the full employment objective set by Emmanuel Macron by 2027.