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05/27/2014
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Changes regarding SMEs in France and Spain – Insolvency Barometer in France

Changes regarding SMEs in France and Spain – Insolvency Barometer in France

This panorama shows, through our barometer, new trends about insolvencies in France, considering the first four months of 2014.

A lull is observed from January to April 2014, the number of insolvencies falling by 2.3%. Over the same period, the financial cost (outstanding amounts) decreased by 16.4% and jobs threatened by the insolvencies of 13.9%. However, the number of insolvencies over a year remain still high (64 127). We find the most number of insolvencies in business sectors such as services for companies and local authorities, food industry, paper - wood and automotive and transport, particularly auto-retailers.

You will also find in this panorama a comparison between the situation of SMEs in France and Spain. Essential in both countries, SMEs are dependent on challenging economic environment, with an upsurge in the number of insolvencies since 2009. However, since the crisis, despite a number of similarities, the situation of SMEs differs between the two countries. The Spanish economy improves in 2014, driven by the renewed dynamism of exports, and in parallel the situation of SMEs is recovering. Thus we expect in 2014 a decrease of the number of insolvencies of SMEs in Spain.

The crisis was less pronounced in France, but the financial situation of its SMEs gradually degraded and continues to deteriorate recently. Therefore, the acceleration of growth in France will stabilize (but at a high level) the number of insolvencies in 2014.

Insolvency Barometer

Thus far, 2014 has been characterised by a record number of insolvencies year-on-year (64,127, up 3.5%), well ahead of the peak seen in 2009. However, over the first four months of 2014, there has been a slowdown, with the number and cost of the insolvencies falling 2.3% and 16.4% respectively compared to the first four months of 2013. In addition, this financial cost (outstanding amounts) is at a level close to that of 2009 (4.64 billion euros), and has been on a downwards trend since December 2013. Most of the companies currently experiencing difficulties are small companies.

Changes regarding SMEs in France and Spain: convergence, then divergence

SMEs in France and Spain are, in many ways, similar: they represent only a small proportion of companies, but they have a critical economic weight. They are the first to suffer when the economy deteriorates: more insolvencies, reduced turnovers and cash flow shortages. They are all engaged in a fight for survival.

Although they share these characteristics, there was not evolved in the same way in 2013. There were differences in terms of their wage costs, debt and profitability. This divergent dynamic means that the forecasts are different. Despite the weakness of the recovery, Spanish SMEs, now more robust in financial terms, should see a falling off in the number of insolvencies. In France, however, the slight upturn does not give much hope for an ebbing in the number of SME insolvencies.

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Contact


Jonathan PEREZ

T. +81 3 5402 6108 
jonathan.perez@coface.com

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