Business failure figures are worrying. Should we be worried in the longer term? The decryption of Fanny Guinochet.
More companies are filing for bankruptcy: commercial court registries recorded 41,000 failures last year, i.e. 50% more than in 2021. It should be remembered that 2021 was a very special year: in full Covid-19, the “whatever it takes” was working at full capacity and with state-guaranteed aid and loans, the government kept businesses on life support. We are now witnessing a “catch-up”, a return to normal, because it is the life of the economy to see companies disappear and others appear.
>> Companies: should we fear an avalanche of bankruptcies in 2023?
This often corresponds to changes in models, evolving needs. For example, we see it in clothing, the big brands, like Camaieu, Kookai, Pimkie, are in difficulty. This is due to changes in consumption: we buy a lot more online, less in stores, we turn more to second-hand, etc.
Concerns for 2023
There are also fears for the year 2023 because of inflation and the international situation. The massive subsidy plan put in place by the Americans to attract European companies is creating tensions. Some large European groups have indeed begun to intensify their production in the United States, which penalizes subcontractors from the “Old Continent”, who, as a result, find themselves with fewer orders.
And then, it will soon be a year since the war in Ukraine: energy prices continue to weigh on activity, raw material prices remain high. Interest rates are rising, banks are still supporting companies, but are tightening credit. All of this undermines businesses.
The government says stop the “whatever the cost”, but it distributes aid. Problem: companies do not always grasp it. For example, barely 30% of companies, which can claim partial coverage of their energy bill, have applied for it. And then, some worrying signals. Pierre Pelouzet, the business mediator, notes that there have been more and more late payments in recent months. Which betrays cash flow problems and job creation side, it settles. There are still labor shortages, but the French economy is creating fewer new jobs. No big worries yet for the year 2023, but some lights are turning orange, even red.