The Euler Hermes group, one of the major players in the world of credit insurance, makes a very dark observation: we can expect a 25% increase in business failures in France in the 'year and a half coming, especially because of the coronavirus. According to the group, it is during the fourth quarter of 2020 and the first half of 2021 that the French economy will suffer the most. The wave will arrive in October and should therefore continue until the middle of next year.
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State aid that stops
Why this lag compared to the epidemic? Firstly, because the commercial courts remained closed for a long time, which led to the freezing of collective proceedings. But also, and this is the main explanation, because today, the various devices put in place by the government allow companies to keep their heads above water. Whether it is short-time working, state-guaranteed loans or the solidarity fund set up to help very small businesses, all these measures limit the damage.
But the infusion will not last forever and Euler Hermes predicts that, as soon as these aids are disconnected, many companies (more than 64,000) will not take the shock.
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Other regions of the world already affected
In other regions of the world, the wave will arrive faster. In Asia-Pacific, it is already in action. Logical, while the region was hit earlier than France by the epidemic. The United States is also hit faster and more violently. Euler Hermes predicts an increase in corporate default there twice as strong as in France (+ 57%). The reason: the rapid spread of the virus across the Atlantic… and the fact that, as in France, there have been support measures, they have been more selective.
In Europe, half of the countries will be affected this year, predicts the credit insurer, including Sweden, Ireland, Portugal and Italy. The other half will be more concerned next year: France, therefore, but also the United Kingdom and Germany.