In 2022, 42,500 French businesses closed down, representing a 49.9% increase in insolvencies compared to 2021, according to a report by a renowned data analytics consultancy. This record figure is a result of the poor economic recovery since the start of the COVID-19 pandemic.
Insolvency numbers had decreased between March 2020 and November 2021 as businesses heavily relied on government support programs. However, as the financial support runs out and businesses have to start repaying state-backed loans, the number of insolvencies is going up again.
Generally, insolvencies have affected the smallest businesses the most. Across Europe, 80% of all bankruptcies (1.6 million) in 2021 involved one-person companies, according to the European Commission – and the same is true of France.
However, data shows the situation is becoming increasingly concerning for larger SMEs with 10-99 employees. Soaring energy bills, low economic growth, and the numerous financial constraints imposed by the repayment of state-guaranteed loans all contribute to this trend.
The report states that the number of insolvencies will continue to increase in 2023, forecasting 55,000 bankruptcies for that year, which is close to the 55,400 recorded business failures of 2017. An increase in insolvencies is also being recorded in other parts of Europe.
While 100,000 companies are at risk of bankruptcy in Italy, requests for the temporary suspension of operations have increased by 39.4% in Poland in the past year. In the UK, “more than one in ten businesses reported a moderate to severe risk of insolvency in August 2022”, according to a note from the Office for National Statistics.
Pan Finance is a print journal and news website providing worldwide intelligence on finance, economics and global commerce. Known for our in-depth analysis and opinion pieces from esteemed academics and celebrated professionals; our readership consists of senior decision makers from across the globe.