Numerous bankruptcies of companies, expected by the end of the year

"No company will be delivered at the risk of bankruptcy", had assured the president of the Republic in his official speech of 16 march, where he announced the country's entry into containment. Since then, the alarming signals are increasing, and a study of the French economic Observatory (OFCE) revealed this Friday, evokes the same "levels of failures is unprecedented,".

see also : A tsunami of bankruptcy filings in order to back

the simulations of the impact of the pandemic on the solvency of enterprises, carried out from a sample of a million companies, lights, even the dizziness. They show an increase of almost 80% of the failures. The failure rate of enterprises (that is to say, the proportion of companies with own funds become negative, and might, therefore, bankruptcy) could grow by 1.8% in normal times to 3.2% this year as a result of the crisis. "These figures seem small, but in fact it reduced the number of business failures of almost 55.000 at 95,000, so this is a substantial increase and new", commented Xavier Ragot, president of the BOARD. Moreover, a multiplication by 2.5 of the liquidity problems of enterprises is observed, rising from 3.8% in regime of steady growth, more than 10%.

This is ad heavy repercussions on jobs: the BOARD believes that the bankruptcy will potentially be 250,000 job cuts. So much so that the economic recovery is very gradual and uneven across sectors, and that even strong companies can be threatened by the sharp fall in their order books.

Strength of SMES and ETI

The impact of the pandemic is very heterogeneous according to areas of activity, the size and the settlement areas of geographical companies. Unsurprisingly, accommodation, restaurant, catering, services to households and construction are particularly vulnerable to failures. In this last sector, the reduction of the activity can even reach 85%. Micro-enterprises and large enterprises appear to be more vulnerable, while SMES and ETI are more solid. And it is in the Île-de-France and in the South-is that these failures should be the most numerous. Conversely, those located in the north of Occitania and the eastern part of the region Auvergne Rhône-Alpes seem to resist.

The survey also underlines the efficiency of the device of the part-time workers to limit the failures. Without its implementation, it is estimated that the share of companies in bankruptcy would be passed from 3.2% to 4.4%. However, she also indicates that this device is poorly adapted to sustainable evolution of the activity of companies, and may sometimes decrease the incentives to return to the activity.

see also : Why the State will not be able to save all of the firms in distress following the Covid-19

so these bankruptcies are important, the OFCE advocates for a more targeted, for preserving employment and productive capacity. He claims, inter alia, the idea of contributing to the own funds of all the insolvent companies, regardless of their viability (approximately 31,000 companies). The cost of this measure is estimated at 8 billion euros.

The editorial team conseilleLes professionals are seeing the wave of faillitesLe unemployment rate will explode in the coming months?The French State at the bedside of the economy nationaleLa France has become the sick man of the european economy?Guarantee $ 300 billion of business loans: how the government could improve its plan aideSujetsL'Observatoire français des conjunctures économiquesFaillites of entreprises3 commentairesDelaloyle 19/06/2020 15:36

thank you, president !!!! thank you !

A. Savanele 19/06/2020 15:13

Again, thank you the hygienists and the containment widespread.

mistophorele 19/06/2020 14:16

it is anticipated that they will put this fiasco on the back of coronavirus completely excluding their responsibility to spoilers , this is the good war , especially as the French are willing to swallow the snake obese lies of LREM .

Read the 3 comments