The number of business failures in France in 2024

All French businesses were severely affected during 2024, further weakening an already strained ecosystem. Under the combined effects of inflation and monetary tightening, business failures reached unprecedented highs in France during this period.

The state of business failures in 2024

Business failure occurs when a business finds itself unable to pay its debts using its available resources. In other words, it no longer has enough cash to pay its suppliers, social security contributions, taxes, or employees. Under French law, business failure means "sounding the alarm" before the courts due to a lack of cash flow. In concrete terms, this results in the initiation of collective legal proceedings before the competent court. There are three types: safeguard (the company anticipates and requests assistance before going under), receivership (the company suspends payments to rethink its internal operations and attempt to revive economic momentum), and liquidation (the struggling company has no other option but to cease all activity).

Until the end of December 2024, approximately 66,000 bankruptcies were recorded nationwide. This represents a peak in bankruptcies not seen in two decades. This represents a significant increase in the number of companies operating in France, with nearly 1.6% having taken legal action. The companies most affected by bankruptcies during that year were mainly VSEs (Very Small Enterprises) with an average turnover of around €121,000 for fewer than 10 employees per company, as well as SMEs (Small and Medium Enterprises) capable of generating nearly €6,000,000 on average for fewer than 250 employees. The latter experienced nearly 90% of bankruptcies due to their more fragile cash flow. Mid-sized enterprises (ETIs), on the other hand, with a number of employees between 250 and nearly 5,000, had barely experienced a few hundred cases, but highly publicized (chemicals, materials, etc.), while noting their average turnover exceeding €180 million. For 2024, large companies (with more than 5,000 employees) experienced almost no bankruptcies. Their turnover reaches nearly €5 billion, demonstrating their economic dominance. These figures reveal the precariousness of small businesses in the face of various shocks (energy, interest rates, market loss).

The direct causes of the record number of bankruptcies in France

Employment in France has experienced many difficulties, leading to the bankruptcy of a large number of companies during 2024.

Among the main causes is the post-COVID situation in France. After the COVID-19 crisis, there was an abrupt end to post-COVID support. During the transition from 2023 to 2024, most of the exceptional measures such as the PGE (State Guaranteed Loan), reinforced partial unemployment, and sectoral aid expired or even began to be repaid, leaving many companies without a safety net. Many VSEs and SMEs took out PGE loans during the pandemic; they are now suffering and struggling to meet their repayments. These companies have found themselves suffocated, beyond their due dates, by the amount of annual repayments.

Furthermore, the explosion in energy costs and the continued rise in gas and electricity prices have increased fixed costs for businesses, especially those that are high energy consumers, particularly in the industrial, construction, and agri-food sectors. Geopolitical conflicts have also led to rising customs duties and weakened supply chains, which has directly impacted logistics and import/export costs.

The impact of these bankruptcies on employment in France

During this period, these bankruptcies jeopardized more than 260,000 jobs across the country. Compared to the previous year, this represented an increase of more than 30%. Construction and real estate are the most affected sectors. This sector alone accounts for more than 50,000 jobs. With the sharp rise in interest rates, real estate lending has slowed, inevitably reducing construction or acquisition projects, resulting in less activity for construction companies. Furthermore, this sector, already exposed to very long subcontracting chains, sometimes defaults or pays late, thus causing the entire chain to collapse and triggering a cascade of failures. This sector is therefore one of the most severely affected.

The year 2024 was a pivotal year, marked by a worrying wave of bankruptcies, primarily affecting French VSEs and SMEs. This wave of bankruptcies not only affected figures, but also affected the country's productive and social fabric.