Jonas Haddad is a lawyer. Sébastien Laye is an economist and entrepreneur.
A statistic almost unnoticed and yet oh so crucial, in the second quarter of this year, business bankruptcies in France soared by almost 35%. After a period of lethargy during the Covid period and massive state aid, the phase shift of these, the inflationary context and the difficulties of households mean that the level of insolvencies has now reached that of some pre-Covid years, with, for example, 13,266 companies having opened a default procedure during the same second quarter, or more than 50,000 procedures between July 2022 and July 2023. In total, 25,300 business leaders will have closed in the first half of the year, and the number of jobs ultimately threatened (55,000, a jump of 80%) exceeds the last highest statistic (2014). It would be wrong to dismiss this litany of statistics and procedures too quickly.
The subject of companies in difficulty is at the crossroads of macroeconomic considerations, necessary (and always postponed) reforms, social issues and purchasing power. Statistics from the Bank of France show that 90% of the entrepreneurs concerned run structures with fewer than five people. Construction is the most affected sector, an over-administered and overtaxed sector, whose crisis is still denied by many of our leaders, associating it by simplism with real estate rent. It is so convenient to take refuge in clichés out of intellectual laziness instead of rolling up our sleeves.
Periods of economic contraction have always generated their share of bankruptcies. But this time there are also public policy failures.
Jonas Haddad and Sébastien Laye
It is then the hotel and restaurant industry that accounts for the largest hecatomb, while the figures for the sector are good after a beautiful summer season: this is proof that public money, untargeted, indiscriminate and distributed in a lax way during whatever the cost, will have only kept many establishments on public drip. Now abandoned by the public authorities, struggling with PGEs and other reimbursements, these establishments are collapsing, caught in scissors by the increase in costs. Personal services, such as hairdressers, provide the third quota. Small businesses are the most affected by these failures.
This spiral of bankruptcies, which after catching up with the pre-Covid level, promises to return to more massive levels (70,000 in 2024) and to have an impact on the level of employment, can be explained by two types of considerations.
The first relates to the cyclical and macroeconomic context: inflation, slowing growth, falling household demand (fuel, housing, energy, food). Periods of economic contraction have always generated their share of bankruptcies. But this time there are also public policy failures. Massive and untargeted aid, without an impact study, whatever the cost, has generated windfall effects, market distortions and today, a cost for the community (public debt) but also for companies, often indebted with maturities of PGEs to repay.
The State has not adapted the law of companies in difficulty, nor the general fiscal and social framework, to allow small entrepreneurs to get through the current crisis.
Jonas Haddad and Sébastien Laye
Fatal mistakes have been made in energy policy: a weakening in 2017 and then a late catch-up of the nuclear sector and the alignment of electricity prices with gas at European level. Public debt is reaching record highs: the French state must raise €285 billion of debt on the financial markets in 2024. Despite this, the state, which during Emmanuel Macron's first five-year term had begun to carry out reforms of the fiscal and social environment, has stopped doing so.
The State has not adapted the law of companies in difficulty, nor the general fiscal and social framework, to allow small entrepreneurs to get through the current crisis. The procrastination at the beginning of this decade will cost us dearly next year. Let's get out of this logic of the famous 3D rule often recalled by professionals of companies in difficulty. Entrepreneurial failure has often been synonymous with "Bankruptcy - Divorce - Depression". Let us replace the third D with that of "Decisions".