Political uncertainty had a strong negative impact on 51% of SMEs/VSEs

More than half (51%) of SME/VSE managers believe that the climate of political uncertainty since the dissolution has had a "strong" negative impact on their activity, according to the quarterly barometer published on Tuesday, September 17 by Bpifrance Le Lab and Rexecode.

In addition, 34% of these bosses describe a "moderate" impact, with only 18% not reporting any specific impact.

These 3.642 people were questioned from August 22 to September 3, at the height of the two-month wait, between the early legislative election and the appointment of Michel Barnier to Matignon on September 5.

Thus, respectively 44 and 51% of those who had investment or hiring projects maintained them despite the political uncertainty. But 36 and 28% postponed them and 20 and 21% cancelled them.

For comparison, the study notes, "these proportions are close" to those recorded in the fall of 2020 before the second Covid-related lockdown.

"We are not surprised by the existence of this uncertainty shock, but rather by its magnitude," Philippe Mutricy, director of studies at Bpifrance, told AFP, "while saying that it could reverse very quickly, depending on political factors that are still beyond our control."

The economist thus recalls that the slump of late 2020 was followed by "a growth boom" as soon as the vaccine was known in early 2021.

He also notes that the indicators concerning SMEs/VSEs had been falling for several quarters, well before the political sequence of the summer.

Investment in particular had already started to decline. In the survey published on Tuesday, the proportion of SME/VSE managers planning to invest in the year (46%) lost four points compared to the previous quarter and eleven compared to the third quarter of 2023.

The balance between those who want to increase their investment spending and those who want to reduce it clearly leans towards the latter, at -15: i.e. -5 points compared to the second quarter, and a historic low outside of 2020.

Environmentally motivated investments are suffering: they are cited by 36% of SME/VSE bosses, i.e. -5 points since May, and -11 since February.

The insufficient level of demand has now joined the difficulty in recruiting as the number one problem for these companies.

Mr Mutricy, however, sees two "good news" in the study: wages are expected to rise faster than prices, and disinflation is continuing.

Illustrative image of the article via Depositphotos.com.