Posted Apr 6, 2023, 11:14 AMUpdated on Apr 6, 2023, 3:52 PM
There is no “wall of bankruptcies” on the horizon, according to the Banque de France. But their number is growing rapidly all the same.
According to figures from the monetary institution published on Thursday, the number of business failures rebounded by 49% in March compared to the same month of 2022. Over one year, the number of open procedures thus stands at 45,120 against 30,285 a year earlier. A figure still lower than that observed in 2019 before the health crisis (51,000), which marks a return to normal after a two-year hiatus during which companies were massively aided by the State to cope with the shock of the coronavirus pandemic. Covid.
Very small businesses (TPE) are not the only ones to fall. SMEs that employ more than 50 employees are also affected with a near doubling of defaults over one year. This primarily concerns the hotel and catering industry, industry, commerce and real estate activities. The Banque de France data does not include the write-offs that exploded last year.
Credit scarcity
“To the ‘zombie’ companies which had been rescued during the pandemic and which are gradually failing are added all those which are suffering from the current context”, observes Maxime Lemerle, specialist in failures at Allianz Trade, in a note published this Thursday.
Between weakening demand, high inflation and the deterioration of financing conditions, the environment has in fact become much less favorable for companies. “If the fall in energy prices brings a welcome breather, this is not enough to compensate”, comments the expert.
“Some companies have not been able to manage the downturn in the economy after a faster than expected post-Covid recovery, and find themselves with more inventory and labor than necessary and high financial costs”, explains Ludovic. Subran, chief economist of the Allianz group.
If the situation is not comparable to what happened after the 2008 financial crisis when the recession combined with a credit crisis had propelled the number of bankruptcies to record levels close to 65,000, the expert worries the consequences of the tightening of credit conditions by banks and the rise in interest rates. “This may be the catalyst for the rise in difficulties over the next few months”, he warns, recalling that interest rate hikes have a “time-delayed effect”. “If the volume of credit drops, there will mechanically be an acceleration of defaults”, abounds Charles-Henri Colombier, director of economic conditions at Rexecode.
59,000 defects
In this context, will defaults exceed their pre-pandemic level from 2023? This is now the prognosis of many experts. This is all the more so as companies are faced with the repayment of their “Covid debts”, the loans guaranteed by the State (PGE) deployed to support the productive fabric during the health crisis.
To the ‘zombie’ companies which had been rescued during the pandemic and which are gradually failing are added all those which are suffering from the current context.
Maxime Lemerle Default Expert at Allianz Trade
In addition, the Urssaf announced that the assignments for recovery would resume this year. Thus, Allianz Trade expects 59,000 defaults this year, an increase of 41%. In a study published last February, EY and AU Group announce an identical forecast if no new government measures are taken.