Companies at Risk: The Alarming State of Affairs in 2024

The year 2024 was marked by a wave of business closures among French companies. According to a report published by BPCE L’Observatoire, nearly 66,500 businesses went out of business—a record high since the 2009 financial crisis. 

In the fourth quarter alone, 17,966 bankruptcies were recorded. This finding, which highlights an extremely strained economic climate, has experts concerned as they look ahead to a year filled with uncertainty in 2025.
 

Modest economic growth

There are many reasons for this situation. First, economic growth is expected to be modest—1.1% in 2023 and 2024—driven primarily by government spending and exports, but without a significant impact on private domestic demand. Investment has plummeted, weighed down by persistent wage inflation in the services sector, which has reduced corporate profit margins. Since mid-2023, rising financing costs have compounded their difficulties, with sectors such as real estate and construction particularly hard hit.
These pressures have hit microbusinesses and small and medium-sized enterprises (SMEs) especially hard, as they remain vulnerable following the successive crises of recent years. A recent survey reveals that 56% of business leaders view political uncertainty as a major obstacle to their operations. Many of them have decided to postpone or cancel their investment plans.
 

A catch-up effect

The rise in business failures in 2024 reflects a genuine catch-up effect. The economic support measures implemented between 2020 and 2022—such as the well-known “whatever the cost” policy—had temporarily prevented business closures. But the companies that were spared, particularly small and medium-sized enterprises (SMEs) and mid-sized companies, merely postponed the inevitable. In 2024, 5,265 SMEs and mid-sized companies went bankrupt, a 51% increase compared to 2019. Mid-sized companies (3 to 9 employees) also saw a significant rise in bankruptcies (+31%). Even microenterprises, which had been relatively spared until then, are seeing their situation deteriorate rapidly.
 

Some sectors have been hit harder than others. Construction and real estate account for a large share of the jobs at risk, with figures reaching as high as 3.5% of employees in these sectors. The hospitality and business services sectors are also experiencing significant losses. Geographically, the crisis is particularly acute in regions such as Aquitaine (a 101% increase in business failures compared to 2019) and Poitou-Charentes (an 87% increase).

A Bleak Outlook for 2025
The outlook for 2025 is just as bleak. BPCE L’Observatoire forecasts approximately 68,000 business failures—a historically high level—with small businesses bearing the brunt. SMEs and mid-sized companies, however, may experience a slight respite, as the catch-up in avoided bankruptcies appears to have come to an end. But companies will have to navigate a challenging environment, marked by economic growth below 1%, repayments of state-guaranteed loans (PGE), and persistent political and budgetary uncertainties.
 

This extremely troubling assessment underscores the urgent need for coordinated action between government authorities and the business community to prevent a new wave of bankruptcies and preserve jobs in the sectors most at risk.