End of Covid aid, energy crisis… the great fear of bankruptcy of companies

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After a record increase in GDP in 2021, inflation has prompted a violent backlash in 2022 for companies with the default rate rising to 23.1% annually in July. The most difficult are companies with less than 20 employees who have combined to pay PGE and the energy crisis. Once again, the state is called to the rescue.

There are two ways to look at the economy: glass half empty or glass half full. From official sources – it’s fair game – everything is not so bad. GDP experienced record growth in 2021 with a 7% increase. And the number of business failures (understanding, receiverships) remained almost above 3,000 in July 2022, “as in the whole world since the beginning of the year” says the Banque de France, which observed 34,653 failures within a year, a decrease of 32.2% compared to 2019, before the health crisis began.

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TESTIMONIALS. Small and medium-sized businesses in trouble: “One year later, we have our heads in the soup again”

Live “whatever it takes”! It’s not that easy. First, because the numbers are distorted by the slowdown in the activity of the commercial courts in 2020 and 2021, after the temporary change in the dates of declaring the suspension of payments and monetary support measures, measures that worth 80 billion euros (1) to the State reminds Bruno Le Maire a few days ago.

Midi Free infographic.

It added 160 billion euros given to banks through state-guaranteed loans (PGE), loans that most companies have begun to repay. An additional burden that is sometimes difficult to have for companies that, in 2020, do not foresee the rise in the price of energy and other raw materials necessary for their activity that will follow two years later.

The most difficult are these so-called “zombie” companies, which were supported by public money when they were already weak before the crisis. Their life span was artificially extended by two years. But they were the first to knock on the door of commercial courts in the second half of 2021, hence the 23.1% increase in business failures between July 2021 and July 2022.

“One more obstacle from 2023”

And this is only the beginning, warns Jocelyne Marti, deputy general manager of the bank Delubac et Cie, which specializes in supporting receivership companies. “The signs of failures are gathering and the time is of concern for the companies. End of government assistance and the policy at any cost, increase in energy prices, increase in the cost of raw materials…
All these factors will lead to a certain number of business failures in all sectors. The state supports companies through PGE until June 2022. And all the banks subscribe to this effort anyway, he recalled. Unfortunately, when the machine stops creating real wealth, it saves appearances by flooding economic actors with unreal liquidity that has no counterpart, but the latter must be compensated. An additional obstacle for companies from 2023″, according to Jocelyne Marti.

Especially for those who have a strong need for electricity, such as catering, automotive, factories that can no longer operate their ovens…

Already, for these sectors, it is shown by increases in failures above the average: + 111% in a year in catering since July 2021, + 100% for bakers, + 87% for in drinking establishments, + 86% for hairdressing salons and beauty. salons, + 40% in the plastering sector… This explains why “the average increase in failures in companies with less than 10 employees is not 23.1% but 44.4% in the last 12 months,” recalls Marc Sanchez, the general secretary of the union of Independents, these small companies that support 6 million employees and small bosses in France. And for him, that’s just the tip of the iceberg.

“The Banque de France does not count the voluntary cessation of activity, which increased from 102,052 in 2019 to 183,376 in 2021. That is +80% in two years. No, we cannot consider the situation to be improving. We have to help ourselves. “One more time.

(1) The amount of subsidies given to companies is broken down as follows: 35 billion euros for the solidarity fund, 35 billion for partial activity and 10 billion for exemptions of charges.

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