The number of business failures jumped 35% in this year’s second quarter compared to the same period last year, putting 55,000 jobs at risk of disappearing, an expert consultancy report revealed on Wednesday.

The number of business closures reached 13,226 in the second quarter of this year, up from the 9,826 recorded at the same time last year and reaching new and unprecedented levels since the start of the COVID-19 crisis in March 2020.

The number of bankruptcies is even at its highest since 2016, a report from expert consultancy Altares published on Wednesday revealed.

Such a trend should be “cause for alarm”, explains Thierry Millon, the report’s author. “We need to bear in mind that the economic reality of tomorrow will not be as good as what it was pre-COVID,” he told EURACTIV.

This would bring the total number of failing businesses in 2023 to 55,000, while the number only stood at 42,500 in 2022. Associated job losses would amount to 55,700, the report further predicts.

The number of bankruptcies fell sharply during the pandemic when the French government stepped in to support businesses ‘at whatever cost’ – a spend-all economic policy now being winded down.

By August 2022, however, EURACTIV France had started reporting over the ever-increasing number of business bankruptcies. While some were failing before the pandemic hit, other, more established firms struggled to recover from the pandemic-induced economic crisis.

This holds particularly true for SMEs, for which insolvency proceedings have increased by 55% in the past year.

“There is a great deal of pressure on SMEs and ETIs [intermediate size companies]”, Millon said, arguing that an increase in energy costs, a fall in purchasing power and the obligation to repay state-backed loans that were first contracted during the pandemic can create a recipe for disaster.

Figures were particularly high for clothing shops, for which the number of bankruptcies increased 72% in the second quarter of this year compared to the second quarter of 2022. The increases in bankruptcies were also significant for the fast-food sector (+64%), restaurant businesses (+53%) and the beauty salons and hairdresser sector (+35%).

“Small local shops are left aside by consumers, who favour bigger and cheaper shopping centres. But the closure of small businesses directly impacts their providers”, Millon said, warning of a trickle-down effect.

In 2021, French Economy Minister Bruno Le Maire announced the creation of a dedicated task force to support struggling businesses, the firepower of which was recently expanded to account for shops and businesses affected by the riots following the police killing of a 17-year-old.

(Theo Bourgery-Gonse | EURACTIV.fr)

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