France, home of the zombie economy

CHRONICLE – Oyez, good people, France is the land of miracles: the Covid 19 has reduced the number of bankruptcies and reduced unemployment.

The figures are there: GDP fell by 9% in 2020, but during that same fateful year, the National Council of Commercial Court Clerks counted 27,645 openings of insolvency proceedings, a decline of 37.5% compared to 2019.

Better yet: business creation has broken all records: 10,000 more in 20,020 than in 2019 and 50,000 more than in 2018.

As for unemployment, we feared a deadly outbreak. However, it stood at 8% at the end of 2020, 0.1 point lower than that which prevailed, on average, over the last three months of 2019, that is to say before the recession triggered by the epidemic of Covid-19.

Who remembers that François Mitterrand, in 1993, then President of the Republic, and Great Liar before the Eternal, declared: “In the fight against unemployment, we have tried everything. ” Well no ! We had not tried the pandemic. In defense of Tonton, the kind and affectionate nickname that Le Canard enchaîné had given to Mitterrand, it will be said that he and his government in 1981 had done everything to increase unemployment: 35 hours, increase in the minimum wage, increase in taxes, archaic program nationalizations, etc.

Finally, according to a note published Tuesday, February 23, by the Banque de France, the net debt of companies, excluding financial companies, increased by only 17 billion euros in 2020. An increase of only 0.8 %, while we were crying wolf about over-indebtedness

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All is therefore for the best in the best of all possible worlds. Long live France ! Long live Macron, our beloved Helmsman!

One sign, however, should worry us: the foreign trade deficit widened in 2020 by 7.3 billion euros compared to 2019. The French tightened their belts, they inflated their savings like Harpagons, and despite everything they bought outside more than they sold him. The congenital weakness of our economy is still there.

Another sign should alert us: according to the same note from the Banque de France, gross corporate debt soared by 217 billion euros, an increase of 13%. The net debt figure is actually misleading because it is aggregate. It is true that many businesses have used government guaranteed loans to boost their cash flow, but it may be a minority. Many others have used it to stay afloat.

The press is obsessed with the problem of the public debt, with this absurd debate on its possible cancellation. But the problem of private debt is overlooked. This debt will have to be repaid, or settled by bankruptcy.

There is also the tax and social debt of companies which will be remembered in the coming months, even in the coming weeks, to the accountants of the companies. And this reminder to reality may be bleeding, the agents of the tax and Social Security do not like to be balladed.

In a nutshell, many of our businesses that are in a state of survival are businesses zombies, a term that has become fashionable among bankers and other frightful financiers.

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To put it simply, we will say that a zombie company is a company that persists in surviving, to the great relief of its employees, when it should have disappeared. But these companies continue to capture human and capital resources that should have gone to companies of the future, and therefore hamper their development. Worse: in their headlong rush, they no longer create lasting jobs, they systematically resort to short employment contracts, temporary workers rather than creating permanent jobs. The often cruel process of creative destruction of capitalism is hampered. And ultimately everyone loses. The future is sacrificed for survival in the present.

The risk is therefore that a large number of French companies will drag our country into a sort of mummification, on the way to a new downgrading, while many other companies, in America or Asia, or even in Europe, have already fully entered the world of tomorrow.

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