A milestone in the current economic stress
For the majority of French companies, the real impact of soaring commodity and energy prices on their cash flow has been a key issue for several months. While the oil market is marking time, the price of metals is still rising in a context of low inventories; the same is true for agricultural commodities, which have been hit by poor yields due to drought.
In this context, all industrial activities are affected to varying degrees, with the most energy-intensive in particular. For some, the cost of energy has become insurmountable, leading to partial or complete shutdowns of production lines, such asArc International, which has been placed under accelerated financial protection. The fear of the next tariff deadlines is now hanging over many companies, such as those in the cold logistics andfood processing industries.
On the household side, inflation, expected to reach 6.4% in 2022, will impact consumption with GDP limited to 2.6% for the year as a whole; it will certainly erode purchasing power. Consumption choices will be more drastic between now and the end of the year, particularly with regard to energy and food.
An increase in the number of collective procedures approaching 50% in 2022
Over a 12-month rolling period to the end of October 2022, all collective procedures increased by +40.6% with just over 39,000 openings. The procedures most concerned are receiverships and liquidations (+40.8%), i.e. 5 points more than in September 2022, a trend which nevertheless remains below that of 2019.
The number of safeguard procedures increased by +25.3% (1 point more in one month); this development now exceeds the 2019 level.
Over the first 10 months of 2022, the increase is close to 50% compared to the same period in 2021, i.e. + 49.2% for receivership and liquidation proceedings and + 43.6% for safeguard proceedings.
SMEs are suffering the most, with insolvencies rising by 52%. Businesses aged between 5 and 10 years account for one third of insolvencies. Finally, the social cost of insolvency is estimated at more than 117,000 threatened salaried positions at the end of October 2022, a level higher than in 2020.
Sectors and regions now heavily impacted
Over the last 12 months to the end of October, some sectors of activity have been heavily impacted, with trends of over 50%: mainly Personal Services (+73.4%), Retail (+61.8%) and Consumer Goods (+54.3%). For these three sectors, the tightening of household consumption choices and the difficulty in finding savings on fixed costs have largely affected companies' cash flow. The food industry has also been affected with +77.4%; upstream, the explosion in the cost of raw materials and energy is sweeping away the most fragile structures.
Significant changes have also occurred in certain geographical areas. While the Île-de-France region has held up best, other regions have seen a 50% increase in the number of insolvencies, notably Auvergne-Rhône-Alpes, the country's second largest economic region (up 51.7%). The Hauts-de-France region continues to suffer with a 78.3% increase in the number of insolvencies. Not forgetting the Normandy and Brittany regions, where the number of insolvencies rose by 56% and 51.5% respectively.
* The following are included in collective procedures: the opening of receivership and direct judicial liquidation (insolvencies in the strict sense), safeguard procedures and crisis exit procedures.
