The time for normalization has come. Between January and March 2022, the corporate insolvencies are on the rise. After two years when Emmanuel Macron’s “whatever the cost” and the benevolence of social organizations (Urssaf, etc.) had brought them to their lowest point, they jumped 34.6% in the first quarter compared to at the same period last year, according to the consulting firm Altares, which recorded 9,972.
However, the number of defects is still very far from that observed before the Covid. “Over twelve rolling months, it is around 30,800, compared to 52,000 at the end of 2019”, points out Thierry Millon, director of studies at Altares.
At the start of the year, the business fabric is therefore continuing to hold up quite well. “Thanks to ‘whatever the cost’, those who had difficulties before the crisis were able to recover,” explains the expert. The expiry in April of the loans guaranteed by the State (PGE) set up in the spring of 2020, at the height of the pandemic “does not represent a major risk, companies, even the smallest, having more cash.
Companies born before the pandemic
However, a reversal has been felt since last December, affecting in particular the companies that employ between 10 and 49 employees. In 56% increase over one year, the procedures concerning them are even more numerous than before the crisis, according to data from Altares. In reality, this rise in failures cannot be dissociated from the explosion of business creations which peaked at around 1 million last year in France.
In the first quarter of 2022, almost half of the defaults come from companies less than five years old. The hecatomb is particularly strong for structures born less than three years ago, at the origin of nearly 20% of procedures (1,927 precisely).
“Created just before the health crisis, they did not have time to develop an activity”, deciphers Thierry Millon. A few sectors concentrated the defaults. Among them, catering, trade, services to individuals (hairdressing salons, etc.), confronted at the start of the year with the Omicron variant and sluggish consumption.
The manufacturing industry, on the other hand, continued to resist. The invasion of Ukraine by Russia since February 24, however, raises fears of a rise in defaults in industrial companies in the quarters to come. “Order books are well stocked but companies are struggling to turn,” summarizes Thierry Millon.
Soaring energy prices, shortage of materials, extension of delivery times hamper production or prevent the honoring of contracts under the conditions laid down. “That often means that you have to pay for electricity and salaries without having any turnover in the face,” he underlines.
The next few months are likely to be even more complicated. “Not all companies will be able to pass on the increase in their costs”, warns Denis Ferrand, director of Rexecode. In addition, the foreseeable slowdown in growth in France is very likely to result in a drop in activity.
Around 6,400 failures avoided
After the “whatever the cost”, the resilience plan announced by the executive to deal with the economic consequences of Russia’s invasion of Ukraine should nevertheless limit the damage. About 6,400 failures would be avoided thanks to this device, estimates in a recent study the credit insurer Allianz Trade.
Still, unlike “whatever the cost”, not everyone can claim this new plan. Only companies that can show that their difficulties stem from the Russian crisis will receive support.
The rise in defaults will therefore continue, but without a surge, according to Altares. Thierry Millon thus expects 35,000 this year – against less than 28,400 in 2021 -, “if the war in Ukraine does not drag on”. Allianz Trade, for its part, evokes a range of between 31,000 and 39,000 in 2022, depending on the severity of the sanction measures that will be taken against Russia.