Wave of business bankruptcies across Europe

On the desks of S&P Global Ratings, corporate default files are piling up. In the month of January alone, and only for France, four companies were classified in this category: Labeyrie (gastronomy), Biscuits holding (white label of biscuits for supermarkets), CGG (geological studies) and Atalian (building services ). While the rating agency only covers large companies, such a pace is unusual.

These difficulties are not limited to France. Across Europe, the number of defaults that S&P has recorded in 2023 has doubled compared to 2022, to thirty. “In November, we anticipated that we would reach a default rate of 3.75%. [du nombre d’entreprises classées « spéculatives »] this year in Europe. At the current rate, we will be on top”explains Paul Watters, who heads credit research for Europe at S&P.

There is no cause for alarm, however: the default rate in Europe remains half as low as during the great financial crisis of 2008-2009, when it was close to 10%. “It’s not a tsunami but in many countries, we are now above the default rate before the pandemic”continues Mr. Watters.

On Thursday, February 15, bankruptcy statistics in the European Union confirmed this analysis. Their number in the fourth quarter of 2023 increased by 60% compared to their low point in mid-2020, during the Covid-19 pandemic, when public aid had kept the entire economy afloat. More worrying, there are now more than the 2016-2019 average. We have to go back to 2015, during the single currency crisis, to find such a level.

“We’re going to get into the tough stuff now”

In the United Kingdom, the situation is worse: last year, the number of bankruptcies was at its highest in thirty years, with 25,000 companies liquidated. In France, the number of failures in 2023 reached 55,500, up 34% compared to 2022, but still slightly at the level of the 2010-2019 average.

“We have a very strong rise in bankruptcies across the world, and not just in Europeconfirms Maxime Lemerle, of Allianz Trade, a company that lists failures around the world. It’s not a big surprise. » With the inflation shock and the sharp rise in interest rates, the euro zone has been stagnating since the end of 2022. “However, eighteen months generally pass between the economic slowdown and the financial difficulties of businesses”, recalls Douglas McWilliams, vice-president of the Center for Economic and Business Research, a British firm. The bulk of the problems must therefore arrive in the coming months. “We’re going to get into the hard part now, confirms Mr. Lemerle. We no longer have the support measures, growth is not picking up, at least not right away, interest rates are not going to come down very quickly…”

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