French Bankruptcies Hit a 33-Year Low as State Aid Masks Reality
- Business failures may jump in 2021 and 2022, data firm says
- Weak companies will ‘tumble quite quickly’ without support
Call it the prop-up effect. As France lived through its worst economic slump since World War II, business failures paradoxically slid to the lowest in 33 years.
The number of bankruptcies and firms seeking protection from creditors or entering receivership fell 38% in 2020, as government aid in the face of the coronavirus pandemic kept French companies afloat, according to figures gathered by enterprise-data firm Altares. That may foreshadow a wave of defaults in 2021 and 2022, said Thierry Millon, its head of research.
Like elsewhere in Europe, France stepped in with billions of euros to bolster companies and preserve jobs. Business failures in the country fell to 32,184 last year, about 20,000 fewer than a year earlier and the lowest since 1987, according to Altares. Without government measures such as guaranteed loans, partial unemployment support and a delay on insolvency declarations, Millon estimates 80,000 companies would have faced default or gone bust.