After a record in 2021, the French are creating less business

Although they reached a record in 2021, a year marked by the health crisis, business creations fell 2.5% in April, after increasing 1.7% in March, according to data released on Friday by INSEE. Last month, 85,597 companies were created, specifies the statistical institute. All categories added in the last three months, the number of business creations dropped, this time, 3% compared to the same period in 2021.

This announcement comes at a time when growth is sluggish and the unemployment rate is at its lowest since 2008.

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You have to look at the last 12 months to see a 2.1% increase in the total number of companies created, year on year. But this progress remains “less marked than in previous months when it was mechanically driven by a ‘base effect’ linked to the drop in creations during the Spring 2020 lockdown”explains INSEE.

It is the fastest growing business creation, with an increase of 13.0% in the last 12 months compared to the previous year and of 7.5% in the last three months, compared to the same period in 2021. On the other hand, the traditional individual business creations have “significantly backward” 7.8% in the last 12 months, a trend that has accelerated in the last three months (-11.2%).

Micro-enterprises suffered the biggest drop: 3.4% in one month. Almost stable last year year on year (-0.1%), its creations “drastically decrease” last three months (-5.8%), observes INSEE.

Some sectors are more affected than others, such as transport and warehousing, which lost 13.7% in April, decreasing “stronger” more than in the previous month (-3.8%). The construction (-4.6%) and business support (-2.0%) sectors also fell “clearly” as well as accommodation and catering (-7.3%). Only business creation in the industry (+3.5%) and domestic services (+0.5%) sectors continued to increase in April.

A record in 2020 and 2021

These numbers are far from the historic record reached last year with almost one million business creations. More precisely, 995,900 creations were registered in 2021, that is, 17% more than in 2020, which had already been marked by a sharp drop during the first confinement. Contrary to what is currently observed, in 2021, micro-enterprises were the majority among newcomers. Almost two of the three creations were, or 64.5%. For At that time, the stoppage of some sectors such as hotels and restaurants, tourism and leisure led workers to look for other sources of income and, for some, to open their own business.

Towards an increase in business failures

As for established companies, times are tough as inflation spikes. After rising to 4.8% in April, the consumer price index could pass the symbolic 5% mark by June. An economic context that particularly penalizes sectors that are highly dependent on fossil fuels, whose prices have soared in recent months, or from abroad to obtain raw materials or metals. The automotive industry is suffering from supply tensions and most major groups and their subcontractors are still in the red.

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This may compromise the sustainability of some companies in the future. According to the latest forecasts by Allianz Trade published on May 18, the number of insolvencies is expected to jump 15% in 2022 and 33% in 2023 in France. However, this scenario remains more optimistic than the one outlined last fall, when Allianz Trade predicted a 40% increase in bankruptcies in 2022. The resilience plan last spring with an extension of 7 billion euros.