With more than 55,000 business failures expected in 2019, the number of insolvencies will still be as high as during the start of the 2008 credit crisis.
The insolvency level remains high in 2019
After declines of 8% in 2016 and 6% in 2017, French business insolvencies decreased only 1% in 2018, and in 2019 a small increase is expected, in line with the ongoing economic stagnation. With about 55,000 cases forecast in 2019 the number of business insolvencies will still be as high as in 2008.
Economic growth expected to stagnate in 2019
The economic expansion is expected to stagnate at about 1.5% annually in 2019 and 2020 due to sluggish domestic demand and lower export growth.
Business sentiment has been impacted by the ongoing social protests and constraints in terms of labour supply and production capacity.
Corporate debt has increased to more than 70% of GDP, and further increases could make French businesses vulnerable to a faster than expected rise in interest rates by the European Central Bank.
At almost 100% of GDP (up from 67% of GDP in 2008), French central government debt remains among the highest in the eurozone. It seems that more measures are required to curb public spending, which, at 57% of GDP, is the highest in the eurozone.
However, additional fiscal spending as a reaction to the social protests will lead to a higher budget deficit in 2019, above the Maastricht deficit threshold of 3% of GDP.