Business failures: “one of the worst fourth quarters in 30 years”

France recorded its worst fourth quarter of business failures in 30 years, now outpaced by the post-Covid catch-up effect, according to a study by the Altares group published on Thursday.

57,729 procedures were opened in 2023, the number of failures increased by 35.8% compared to 2022, already a historical increase of 49% in 2022. For the fourth quarter alone, it’s up 37.2% to 16,820 over the same period. Quarter of 2022.

“Previously, only the recessionary period of 1992-1993 brought France to a comparable threshold for the last quarter,” the study notes.

Many of these failures are “catching up” after supporting businesses on a large scale during Covid, observes Altares, but “the current difficulties of economic actors become more evident in the last quarter of 2023 alone”.

“A New Phase, More Structural”

“We are now entering a new phase, more structural, more linked to the financial inadequacies of companies that must navigate an extraordinarily tight economic environment,” estimates Thierry Milan, director of studies at Altares.

The study, however, underlines that, in the context of a “permacrisis” or permanent crisis, in which companies have been exploring for 4 years, the high failure threshold is “not surprising”.

“Activity at half-mast, inflation levels still high, interest rates still high, reduced consumption, creates a dangerous cocktail for companies with a full flow of cash flow,” says Thierry Millan.

It observes that “even the biggest players are not spared” as failures affected 171 companies with at least 100 employees in 2023, the most since 2014 (185 failures).

The majority (92%) of judgments focus on very small businesses but the pace of SMEs’ difficulties is leading to a sharp rise in the number of jobs at risk, rising from 143,500 in 2022 to 243,000 in 2023.

Construction sector alone accounts for 24% of bankruptcies. Real estate agencies recorded the worst trend (with +116.7% for 910 companies).

Agriculture, on the other hand, stands out with a 7.1% increase in insolvencies. They are also declining in livestock farming (-5.1%).