The slowdown trajectory observed for several months is confirmed with an increase half as fast over 12 months: + 17% in 2024 compared to + 36% in 2023. A deceleration all the more marked in the 4th quarter (+10%). The situation remains particularly tense among structures with more than 50 employees with an increase of + 30% (553) in procedures in 2024. Record rates are still observed among SMEs-ETIs in manufacturing (+ 75%), wholesale trade (+ 76%) or transport (+ 59%). In this context, the number of jobs threatened in 2024 increases and stands at 256.000 over the year (vs. 245.000 in 2023).
Positive signals and good surprises from this 4th quarter
- Young companies less than 3 years old are holding up (+5,5%)
- The building is holding up, supported by the structural work with masonry (+3%)
- The food industry is performing well, particularly bakeries (+3%)
- Retail trade is moving into the green thanks in particular to food (-11%), optics (-22%) and pharmacies (-14%).
- The regions of Corsica, Bourgogne-Franche-Comté and Provence-Alpes-Côte-d'Azur are moving into the green
On the front of the difficulties of this 4th quarter
- Historical record of procedures
- A situation that remains difficult for SMEs and mid-caps with more than 50 employees (+30% in 2024), particularly in the manufacturing industry, wholesale trade and transport
- The number of jobs at risk reaches 256.000
- Real estate still under pressure, social sector suffers (+113% in social action) and hairdressers fall (+26%)
- Normandy, Ile-de-France, Nouvelle-Aquitaine and Auvergne-Rhône-Alpes regions in the red
For Thierry Millon, Director of Altares Studies: "The context of political and budgetary uncertainty, combined with a gloomy economic situation, is clouding the visibility of business and is encouraging a wait-and-see attitude on the part of both companies and the French. A general stagnation that is deadly for the weakest financially or over-indebted structures, particularly those that have not yet been able to turn the page on Covid. As such, the PGE remains a point of attention. According to Bpifrance, €38,4 billion remained to be repaid in December out of the €145 billion granted. The bulk, or €37 billion, is carried by VSEs and SMEs. Reassuringly, "only" 4% of them fear not being able to repay their loan (1). Another factor in the rise in defaults is the resumption of forced recovery by URSSAF (2). Among the receiverships and liquidations pronounced this year, the share of companies that had been the subject of an URSSAF summons in the previous 6 months is increasing (25% of RJ, 17% of LJ in the 3rd quarter). However, these rates remain well below the pre-Covid situation. Beyond the procedures opened this year, it is the transfer of risk to commercial partners that must be monitored. The defaults of 2024 consolidated more than 30 billion in turnover, a loss of income that suppliers will have to seek elsewhere. Worse still, these defaults carry heavy unpaid debts. Of the population of defaulting commercial companies that published their 2023 accounts alone (€10 billion in aggregate turnover), the debt to suppliers weighed €2 billion, to which was added €1 billion in tax and social security debts and €3 billion to credit institutions. In this context, the risk of a domino effect is high and the low growth expected by the executive for 2025 (0.9%) does not bode well for a decline in defaults, particularly among very small and medium-sized enterprises.
18.709 failures recorded in the 4th quarter, a record but also undoubtedly a ceiling
As of December 31, 2024, a peak of 18.709 collective proceedings opened over the last 3 months has been reached. An absolute record for a 4th quarter. Only the 1st quarter of 2015 had such a level (18.750). Over the whole year, we reached a new record of 67.830 defaults.
Nevertheless: 6.700 procedures opened in October, 6.220 in November and 5.789 in December: the end of the year activates the engine brake allowing the increase to be contained to +10% over the quarter. A rate at its lowest for three years, far from the +40% that our economy had to face on a quarterly average until the beginning of 2024.
This end-of-year deceleration allows it to fall back below 20% (17%) over 12 months. Under these conditions, it appears likely that the last quarter of 2024 has reached a ceiling.
Number of business failures by type of procedure per year
The number of judicial recovery openings is increasing more rapidly
Judicial recovery (JR) proceedings are increasing the fastest with 19.641 judgments issued in 2024, or 29,4% more over one year. Now, nearly 30% of judgments are JRs, a rate in line with the past after the Covid interlude below 25%. The return of URSSAF assignments (25% of JRs in Q2 and 26% in Q3) contributes to this increase. During the last quarter, the number of JRs increased a little less quickly (+13,8%; 5.532).
The safeguard procedure is more requested (1.549 in 2024 compared to 1.537 in 2023) but still represents barely more than 2% of all judgments.
More than two thirds (68%) of the judgments handed down concern compulsory liquidations. A rate that has returned to normal, whereas the Covid parenthesis had brought this rate above 75%. In 2024, 46.640 (+13%) compulsory liquidations were recorded, including 12.768 in the last three months. This quarter shows an increase that falls back below 10%.
The crisis exit treatment procedure, established in 2021 and until June 2023 to allow companies with fewer than 20 employees to cope with the economic consequences of the Covid context, was reactivated by the orientation and programming law of the Ministry of Justice 2023-2027. This for two years from November 22, 2023 to November 21, 2025 inclusive. However, this system remains little used. 100 openings were pronounced in 2024 compared to 76 in 2023 over six months.
The vulnerability of SMEs and ETIs is not diminishing and weighs heavily on the number of jobs under threat
553 SMEs and mid-caps with more than 50 employees went bankrupt in 2024, a number up 30%, and with a pace that remains rapid in the 4th quarter (+26%; 141). Under these conditions, the number of jobs under threat reaches 256.000, or 11.000 more over one year.
19% (107) of these SMEs-ETIs are manufacturers who report a 75% increase in defects over the year. The deterioration is of the same order (+76%) in inter-company trade. Road hauliers of goods with more than 50 employees record a barely smaller increase (+59%).
The fourth quarter did not reverse the trend with bankruptcies twice as numerous as at the end of 2023 in road transport or inter-company trade and an increase of another 60% in manufacturing.
Young companies continue to hold up well
Companies created less than three years ago are still those which show the best developments over the year (+8%) and even better, over the last quarter (+5%).
Young or old, commercial companies concentrate 85% of failures and record a 16% increase in the number of openings of procedures. A rate which climbs to 24% on the sole perimeter of simplified joint stock companies, a form popular with creators. Note that the rate of creations of companies of corporate forms over the first 11 months is +6% according to INSEE figures (259.747 vs 244.133 – raw data Altares calculation).
Q4 business failures stable or down in B2C and up in B2B
CONSTRUCTION: the building has held up, the agencies are smiling again
The construction sector accounts for a large quarter of the bankruptcy proceedings (27%) and has 5.111 defaults, including nearly 4.000 in construction activities alone. 3.988 contractors obtained the opening of proceedings: this is 8,6% more over a year, a rate lower than the overall average for the quarter (+10%). The encouraging figure for the end of the year is driven by structural work, where judgments have only increased by 3% (+3% in masonry and +8% in individual houses).
The second work (+12%) and public works (+16%), however, are struggling more. Real estate remains heavily affected (+36,5%), in particular real estate development (+266%) due to the default of a Lyon group, while a wind of renewed optimism is blowing for real estate agencies (-10%).
TRADE: Retail goes green, wholesale sees red
Retail, another major failure factor, representing one in ten defaults (2.094), is finally moving into the green (-0.6%). The trends are even very clearly positive in food (-11%), multi-department (-14%), i.e. grocery stores and mini-markets, opticians (-22%), pharmacies (-14%), but also clothing (-5%). Conversely, furniture is still not managing to get back on track (+54%).
The sale and repair of vehicles is holding up (+8%), driven by garages (+5%), while the sale of motor vehicles (+12%) remains under pressure.
The situation is, however, more difficult for wholesalers (+17,5%) in all activities of the sector.
INDUSTRY: manufacturing is struggling
Bankruptcies in industry (1.132) are increasing half as fast (+4,9%) as the average (+10%). This performance is driven by the food industry, where bakery is king (+3%). Manufacturing is in line with the overall trend (+9.3%) despite tensions in the manufacture of outerwear (+18%), metal structures (+19%) or metal doors and windows (+65%), waste recovery (+100%) or mechanical equipment repair (+86%). Note that printing is back in the green (-3%).
SERVICES: B2B is more affected but in B2C hairdressers have a new alert
In business services (2.563), the increase (+14,6%) is faster. The trend is still strong in business consulting (+20%), activities related to security systems
(+56%), building cleaning (+21%) and the organisation of fairs and exhibitions (+29%). The trend is however favourable for advertising agencies (-16%).
In information and communication activities, increases are marked in IT activities (+23%), particularly in programming (+20%), consulting (+40%) or data processing (+75%).
For personal services, the bad surprise comes from hairdressers. 360 have failed, that's 26% more than in Q4 2023. Beauty care is doing much better (+1%).
TRANSPORT: the risk remains high
Nearly 900 carriers went bankrupt at the end of the year, a number that has risen sharply (+23,6%).
The trend is however a little less heavy for road freight transport (+13%) driven by local freight (+11%) while intercity (+18%) is more under pressure. In other transport activities, the direction is given by taxis (+38%), of which nearly 200 have failed at the end of this year alone.
A very disparate territory at the end of the year
The two heavyweight regions of the French economy are in the red
Normandy recorded the worst regional trend (+31%) of the quarter; 865 companies went bankrupt. In a full year, Normandy is now very close (2.828) to its highest level of 2015 (2.865).
The Ile-de-France region is also doing poorly (+18%) with nearly 4.500 procedures over the last three months, propelling the leading French region to a record level of 16.151.
Nouvelle Aquitaine (+17%) recorded 1.730 failures in the 4th quarter and for the first time exceeded 6.000 judgments for the year (6.173).
Auvergne-Rhône-Alpes is certainly the least uncomfortable of the four. The very poor quarterly figure (+14%) is inflated by the procedure opened on a major real estate group and its hundreds of subsidiaries. Without the latter, the trend would have been close to stability. The 8.000 insolvencies mark was crossed (8.077) in 2024 and takes the region beyond its previous record of 2009 just under 7.900.
Conversely, three regions are improving
In the lead, Corsica, whose insolvencies fell by 16% compared to a 4th quarter of 2023 which had been very heavy. The region thus falls back to its 2019 level (104). Over the year, 417 procedures were opened, a level very close to that of 2017 (419).
Bourgogne-Franche-Comté also has the privilege of having been able to reduce the number of defaults at the end of the year (-5%). A little less than 560 procedures were opened over the last three months, bringing the annual number to 2.234, a figure lower than the records of close to 2.500 from the periods of the financial crisis and then that of the debt in the euro zone.
In Provence-Alpes-Côte-d'Azur, failures have stabilized (0%) at nearly 1.760 over the last three months. This brings the region beyond 6.800 annual failures, a figure at its highest in nearly 30 years (6.900 in 1997).
Other regions are trying to cope
Among them, the Grand-Est is very close to equilibrium (+2%), thus maintaining the number of defaults for the quarter below 1.200. Over the year, the 4.500 mark has just been crossed, but the region has not set a record; 4.562 defaults were recorded in 2016.
Brittany and Centre-Val-de-Loire contained the increase below 4% at the end of the year for just over 600 procedures each. Over the whole year, Brittany posted 2.521 judgments and Centre-Val-de-Loire 2.235, both establishing a high since 2015 at 2.546 and 2.346 respectively.
Hauts-de-France has nearly 1.400 business failures, a number that has increased by less than 5% (4,7%). Over the year, the region is approaching 5.000 failures (4.927), a number that it last exceeded in 2014 (5.061).
Occitanie (+6%) is also significantly below the overall average (+10%), with fewer than 1.700 procedures in the 4th quarter. Over the year, the region has just returned to above 6.000 defaults (6.023), a number almost identical to that of 2015.
Pays de la Loire recorded an 8% increase in bankruptcies at the end of the year with just over 700 procedures. Over 12 months, the region remained below 3.000 procedures (2.727). A limit that it has not crossed since 2015 (3.121).
In Overseas France, the overall trend for the 4th quarter (+6%) masks significant disparities. Thus, Guadeloupe (-4%), Guyana (-14%) and Martinique (-5%) are in the green while Mayotte (+15%) and Réunion (+17%) are above the French average (+10%). However, Guyana and Mayotte each have fewer than 20 defaults over three months. Over a full year, Guadeloupe is close to 360 defaults as in 2011 and Martinique, which is doing well, has barely more than 450 procedures compared to more than 480 in 2023. Réunion has exceeded a thousand annual judgments for the first time (1.153). Guyana (66) and Mayotte (49) have much fewer than a hundred procedures per year.
For Thierry Millon: "While uncertainty over global trade and geopolitical risk threaten growth in 2025, the French economy is marking time. Creativity will be particularly necessary for financial departments to reconcile growth and budgetary restrictions. While large companies are structured to face these challenges, small businesses are particularly vulnerable. This last quarter confirms this once again, three quarters of failures concern entities with fewer than 3 employees. INSEE also revealed at the beginning of 2025 that the banking fragility(3) of VSEs and SMEs was now (in March 2024) higher than its pre-health crisis level. Under these conditions, it can be difficult to be able to pay all your bills on time. Altares notes this every month, late payments are increasing; +1,5 days between January and December 2024 which ends at almost 14 days. A record number that we have not seen since the health crisis. Under these conditions, while we can consider that we are about to reach a peak in failures, we can also fear that this is a plateau, and therefore a commercial risk, with which we will have to deal for several more months."
Bpifrance Le Lab economic survey of VSEs and SMEs (1): https://presse.bpifrance.fr/bpifrance-le-lab-presente-la-80eme-enquete-de-conjoncture-aupres-des-tpe-pme-une-enquete-sur-la-situation-des-tpe-pme-a-fin-2024-et-leurs-perspectives-pour-2025-dans-un-contexte-dincertitude-politiqu
URSSAF Economic Barometer No. 171 – December 20, 2024 (2): https://www.urssaf.org/accueil/statistiques/nos-etudes-et-analyses/notre-publication-mensuelle/barometres-2024/indicateurs-urssaf-fin-nov2024.html
At the start of 2024, the banking fragility of VSEs and SMEs will be higher than its pre-health crisis level – Insee Analyses • n° 102 • January 2025 (3): https://www.insee.fr/fr/statistiques/8316145
Illustrative image of the article via Depositphotos.com.