Business failures in France: has the peak been reached at the end of August 2025?

Macroeconomic situation of companies

The French economy is facing a drop in demand...

This decline in demand stems from the almost uninterrupted rise in the household savings rate, which, quarter after quarter, has reached record levels (excluding the Covid period). As a result, non-agricultural market employment is trending downward. While growth remains resilient, this trend is allowing productivity to resume a rate of growth similar to that recorded before the Covid years. Finally, the business climate remains poor for all sectors of activity.

…which is manifested in particular by a need for financing of non-financial companies

In this unfavorable environment, non-financial corporations (NFCs) are seeing their economic ratios deteriorate. First, due to this sluggish activity, the margin rate is falling due to wages remaining dynamic. Second, the savings rate of NFCs is also deteriorating, even more so due to an increase in the interest burden. Finally, and as a corollary, companies are recording a financing need in the first half of 2025 for the first time in two years due to the cost of storage, which is weighing on cash flow.

Political uncertainties could weigh on activity and postpone the expected decline in the number of business insolvencies

For the second half of the year, while activity is expected to remain resilient, the level of uncertainty appears to be at its highest due to political instability and renewed tensions at the time of the adoption of a budget for the French economy. This context is conducive to calling into question companies' development, investment, and hiring plans.

Failure diagnosis by the end of August 2025

Has the peak of business failures been reached?

In 2025, the number of insolvencies continued to increase and the threshold of 68.000 was exceeded for the first time (at 68.400 in August in cumulative over 12 months). The year 2025 is also characterized by a decline in their volume. Indeed, over the first 8 months of the year, the increase in insolvencies was reduced to 3% after double-digit growth rates in the two previous years (+38% in 2023 and +21% in 2024).

These failures mainly affect companies with an age of 3 to 10 years (52%). For SMEs and mid-caps, the rate is higher: 41% of failing companies are 16 years old or older. Another characteristic is that the increase in failures is higher the larger the companies. Over 10 years, they have increased by +6% for microenterprises, +50% for SMEs, and +94% for mid-caps.

Threatened jobs are now trending downwards

In August 2025, 253.000 jobs are at risk due to business failures over 12 months, which represents a decrease of 9% compared to August 2024. Although slightly decreasing, this number of jobs at risk remains at a high level. Over the recent period and considering 2019 as a reference level, the additional number of jobs at risk over the last three years is more than twice as high (+137%) as the lowest number of jobs at risk recorded over the period 2020-2022.

Here too, the number of jobs at risk depends on the company category. Over a 10-year period, they increased by +32%. For mid-sized companies, their increase is twice as high (+64%, compared to +11% for very small companies).

Finally, sectoral disparities remain particularly significant. The share of jobs threatened by business failures in the construction and transport and warehousing sectors is high: 23%, while they represent 16% of total jobs in the French economy. Conversely, trade and business services are less affected: 32% of threatened jobs are in these two sectors, while they represent 40% of total jobs in the French economy.

In 2025, BPCE L'Observatoire predicts 69.000 bankruptcies, an increase of +3% compared to 2024. The forecast adopted in January is thus slightly revised upwards (+1.000 bankruptcies), taking into account the latest available figures and the outlook through to the end of the year. The economic impact of these bankruptcies should, however, be around 245.000 jobs at risk, a decline of 7% compared to 2024 when two major groups defaulted. Also, the business outlook remains fragile for VSEs and SMEs in the coming months, penalized by household consumption which remains sluggish, by investment which is declining, and by political and budgetary uncertainty which adds an unknown factor complicating the financial equation for business leaders. In addition, longer payment deadlines, higher credit costs, and Covid debt repayments (including state-guaranteed loans) are weighing on companies' financial stability. According to BPI France, around 4% of managers still in the state-guaranteed loan repayment phase say they fear they will not be able to repay these loans (a percentage that has remained stable since the first estimates in 2021).

Failure rate analysis

Business demographics are very dynamic, including for corporations

Bankruptcies are a key factor in the demographics of businesses, which have been very dynamic for several years. In 2024, there will be 5,9 million businesses in France. This number of businesses has grown by nearly 5% on average per year over the past five years, a rate one percentage point higher than that recorded over the previous five years. Sole proprietorships represent just over half of all businesses (54%), a proportion that has been increasing slightly over time.

In ten years, the number of business creations has doubled, as has the number of closures. In 2024, just over 1,1 million businesses were created. The creation rate thus stands at 19%. Stable over the last 5 years, it is significantly higher for sole proprietorships than for companies (26% versus 11%). At the same time, nearly 0,9 million businesses have ceased their activities. The closure rate, at 15%, increases year on year and remains nearly three times higher for sole proprietorships than for companies (22% versus 7%). In other words, the average lifespan would thus be 4,6 years for sole proprietorships and 13,6 years for companies.

The growth in the number of businesses (+48% over the last five years) is thus significantly higher than that of other variables in the French economy in terms of volume, such as added value (+13%) or employment (+11%). This growth in the number of businesses is mainly driven by micro-businesses (+65% for those with no employees), while it is three times lower for businesses with 50 or more employees (+22%).

The failure rate remains low... except for medium-sized and intermediate-sized companies!

Knowing the number of businesses makes it possible to establish a failure frequency. This rate is set at 1,1% in 2025, a low level identical to that of 2024 and 2019! The increase in the business failure rate since the low point at 0,5% in 2021 is concomitant with a deteriorating economic situation with GDP growth below its potential and a catch-up effect of those that were suspended during the Covid period.

By company size, this analysis of the failure rate allows us to draw three lessons:

• First, the failure rate of companies without employees is tending to fall, mainly due to the dynamism in the number of companies created: 0,7% in 2025 compared to 1,2% in 2015;
• Then, the larger the company in terms of number of employees, the lower the failure rate: 1,4% for medium or intermediate-sized companies (50 employees and more) compared to 2,3% for small companies (10 to 49 employees);
• Finally, the rebound in post-covid bankruptcies is more marked for small businesses (10 to 49 employees) and especially for medium-sized or intermediate-sized businesses (50 employees and more).

Have the lower insolvencies observed during the Covid years been offset by the increases recorded in subsequent years? This is not the case for microenterprises. With a gap of 2,6 percentage points, the insolvency rate remains significantly lower than it would have been without this exceptional period. This is the case for SMEs and mid-caps, with the catch-up being almost complete. In the near future, the insolvency rate is expected to continue to rise.

Territorial disparities are legion and some territories accumulate vulnerabilities with high and increasing levels of failures.

In 2025, the SME-ETI failure rate will be 2,1% at the national level. Some territories are below this level: Lower Normandy (1,2%), Franche-Comté, Brittany (1,5%), Alsace and Pays-de-la-Loire (1,6%). Others are higher, the overseas departments (between 2,6% and 4,0%) and Île-de-France at 2,7%.

Between 2019 and 2025, the trends are also particularly heterogeneous. At the national level, the SME-ETI failure rate increased by +0,7 percentage points (pp). For some territories, it barely changed: Limousin (-0,2 pp), Lower Normandy (stable), Burgundy, Réunion and Centre-Val de Loire (at most +0,2 pp). Other territories, however, are facing significant increases in the failure rate: Martinique, Poitou-Charentes and Guadeloupe (between +1,5 pp and +1,7 pp over the period).

*From the data extracted and reprocessed by our economists, BPCE L'Observatoire is now able to provide a very detailed statistical and economic analysis of business failures.

Illustrative image of the article via Depositphotos.com.