Is the French economy at half-mast? What failures?

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The French economy has been particularly affected by the pandemic, which has affected all sectors since the beginning of the year. The first containment, decided in March 2020, affected all sectors of activity. Symbol for many employees of partial unemployment, it has been for companies symbol of insecurity, especially financial. An event that highlights failures that are sometimes too great. While November is also marked by the introduction of a new containment, the time has passed. Despite more flexible measures, allowing companies to continue their business, they deal with many unknowns. Unknowns sometimes decisive for their future.

Unstable financial health for the French economy

Although the failures appear to be less severe in November compared to the beginning of the year, the situation is still worrying. Indeed, no territory is spared throughout the country. All the more so since another unfortunate phenomenon, evidence of the delicate situation of companies, is experiencing significant growth: judicial liquidations. Although they accounted for 2/3 of the procedures in Q3 2019, they now cover 75% of them in Q3 2020. One of the reasons for this is the difficulties of companies to pass the milestone following the first containment. Even if the aid proposed by the State and the Regions helps businesses… They will have to be refunded afterwards. As a result, these devices only delay the coming crisis, the beginnings of which are beginning to be felt.

Failures in France
The number of failed businesses increased in Q3 2020, but remained lower than in March 2020. – Idaia Source

At the regional level, the finding is all the more important. Indeed, the Island of France accounts for 25% of the country’s failures. In New Aquitaine, failing companies account for “only” 8% of French failures. For the French economy, this is a blow. In Q3 2019, 77% of the proceedings were judicial liquidations in the Ile de France, compared to 24% in Q3 2020. In New Aquitaine, in Q3 2019, this concerned 64% of the proceedings, compared to 70% in Q3 2020. The Gironde also follows this pattern, with a 62% increase in Q3 2019 to 74% in Q3 2020. Over the last 30 days, it has identified no less than 60 failures. A scenario that seems to repeat itself after March 2020, and the first containment, but in a slightly less important way.

Gironde New Aquitaine business failures
The companies girondines, also affected by the failures. – Idaia Source

Data and AI for French companies

Containment or changes in work lead to adaptations for many companies. In order to prevent them from finding themselves in difficult situations, IDAIA has put in place a tool to help businesses. Thus, by protecting themselves from risks, they can secure their commercial and financial interactions with third parties. Suppliers or customers are also part of the equation. In the relationship between a company and its partners during a period of confinement, unpaid debts are frequently found. A delicate situation when the economy is a pillar for a French company. The tool also helps to prevent fraud, but also to control the solvency of a company. This is so that risk-taking is minimal, and that all the players get away with it. Finally, the objective of this tool is also to be able to maintain contact, at a time when everything is done at a distance.

St Catherine Bordeaux shopping street
Many businesses contribute to the French economy. They are also in trouble because of the containment.

The French economy is in great difficulty due to two successive containments and financial difficulties for companies. Since March 2020, many industries such as tourism, restaurants, hotels and events have been hit hard by the pandemic. These are all professionals in difficulty who are in turn under the yoke of COVID-19 and who want to be able to rebound to better relaunch their activity. Companies that also need solutions to get off to a good start, and turn the page on 2020 and look a post-pandemic.

Sources:

Failures in Q3 2020 – Press Release – IDAIA Group – November 6, 2020

Business failures by territory – IDAIA Group

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