Opinion | Business failures: a trompe-l'oeil improvement

Whereas financial progress is round 1.2%, the variety of enterprise failures
fell nearly 4.8% in 2019 to 52,000 units.

We might, in a second of spontaneity, rejoice at this drop introduced by the corporate Altares, however the etiological evaluation, that’s to say causal analysis, results in extra warning or perhaps a sign of concern.

At first, we observe that many firms fall attributable to an incapacity to take care of their gross margin in worldwide competitors and even solely European. This deterioration in gross margin comes from
the all too often limited quality / price ratio of our productions.

The simplistic adage which states that “France claims to promote Spanish high quality merchandise at German costs” has resonance and is sadly not with out basis, all of the extra so since Spain has achieved a exceptional “ascension” in lots of sectors.

The determine of 52,000 failures mustn’t masks that the variety of jobs destroyed

Then, it should be admitted that lots of our SMEs haven’t but taken care to include a required degree of latest applied sciences of their productions. Thus, in historically buoyant markets for France, we at the moment are overwhelmed by dynamic Asian competitors. It’s exactly the one which reaches our “lovely” SMEs with severe battalions of workers. The determine of 52,000 failures mustn’t masks the truth that the variety of jobs destroyed by the lack of enterprise was larger than in earlier years. To be exact, the amount enhance is 1.6% or 175,000 folks.

Faux buddy

Third ingredient, the phrase enterprise failures is a false buddy. Instantly, we consider judicial liquidation the place the definition of INSEE requires extra rigor. “A authorized unit is in default or in chapter from the second when authorized proceedings are opened towards it”, says the statistical institute.

To choose an indeniable accounting definition, there’s a failure when the corporate can’t meet its present liabilities via its out there property. “The idea of failure shouldn’t be confused with the idea of cessation of exercise”, provides INSEE. Statisticians are proper to have a great understanding of our regulation of collective proceedings as a result of it modifications the axis of financial pondering.

Zombie firms

Recall that banking analysts have detected, attributable to low rates of interest, that monetary establishments are persevering with to
finance so-called “zombie” companies

on the expense of the very high quality of their claims. They like to increase the chance somewhat than to actually acknowledge their losses on degraded recordsdata. However this – which attorneys might name unreasonable continuation of the exercise by ruinous means – doesn’t seem within the determine for failures which supposes that the bubble has burst.

There’s certainly an “underground financial system” round artificially averted courtroom settlement procedures. The financial pole of Euler Hermès will not be mistaken when it anticipates a deterioration in 2020 of the speed of failures in line with calculations alas established earlier than the frontal microeconomic impression as a lot as brutal of the motion of 50 days of strikes. How might it’s in any other case for commerce, lodges and even catering?

In consequence, I don’t consider for a second that we’ll face 53,000 failures in 2020, however a better determine. This determine will masks the rescue operations in instances the place the supervisor, and even his associates, contribute distinctive sums to the present account so as to keep away from the catastrophe.

A determine which is able to inform us nothing concerning the instances the place a bunch decides to shut an institution, which doesn’t have authorized persona, and to rearrange with its suppliers via the event of a schedule eliminating the chance of default.

In widespread parlance, this consists of claiming: “We agreed to be paid at La Saint-Glinglin somewhat than having a flag planted”. And there, near the concrete, we’re removed from the hasty conclusions of sure financial analysts.

Jean-Yves Archer is an economist.