+42% This is the increase in the number of business bankruptcies in the last 12 months compared to July of last year. The symbolic milestone of 50,000 company bankruptcies a year is not far off. This sudden increase, in fact, is not at all surprising. It results from a budgetary option defended by the Minister of Economy. Bruno Le Maire has put an end to the “whatever the cost” policy, which is very costly for the State’s finances.
So that after having benefited, during the ups and downs of the health crisis, from what could be called an artificial respirator (partial unemployment, loans guaranteed by the State, displacement of the tax rate, etc.), already fragile companies before the crisis began to fade when the State deprived them of this exceptional support from which they benefited. Little by little, we are returning to the situation that prevailed before the Covid crisis, that is, just over 50,000 company bankruptcies per year.
The sharp increase in restaurant bankruptcies is actually a return to normality.
It is with this yardstick that the sharp increase in bankruptcy proceedings in recent months in the hotel and restaurant sector must be put into perspective (+69.7% so far this year compared to July 2022). But the 6,966 bankruptcies observed by the Banque de France in this sector are comparable to the level reached in mid-2019 (6,840 bankruptcies in 12 months).
On the other hand, the figures of the last few months clearly show the sectoral disparities with, for some, greater resilience than before the crisis and for others, bankruptcy filings are significantly more numerous than in 2019. This is the case in the disparate galaxy of media (audiovisual production, press, cinema, telecommunications) and among the companies that operate in the financial sector, forcing themselves to close this growing number of mortgage brokers.
Fewer bankruptcies than in 2019 in the agricultural sector
Insolvencies of industrial companies are also more numerous than in 2019 (+7.5%) due to the very high cost of energy. Conversely, companies in the agricultural sector benefit from higher selling prices, which generates sufficient margins to face rising costs. Compared to mid-2019, the number of insolvencies shows a drop of almost 16%. The same is true of transport and logistics, which are benefiting from strong demand, increasing their prices but also their profits.
Another interesting finding: very small companies are less affected than larger ones by the skyrocketing rate of bankruptcies. A paradox? Not really. Some of the companies that should have gone bankrupt in recent years if they had not profited at any price are also in trouble. Some of them have benefited greatly from PGE that they can no longer repay.
50,000 failures but a million business creations a year
Proportionately less supported by the state during the crisis, micro-enterprises that have fewer recurring charges, little or no loans to repay, often zero employees, now more easily manage to turn their backs. Companies created by workers to supplement their income with a complementary activity are included.
We do not have precise figures on their number, to the extent that an employee who creates a micro-enterprise does not have to specify when registering his company if he intends to resign in the long term to take over 100% of his business. But the strong increase in the creation of companies gives an interesting indication with, clearly, a before and after Covid. Until mid-2020, between 600 and 800,000 companies were created in France per year. After the first lockdown, the million mark has been crossed with no turning back since.
Source: BFM TV
