Companies in France: fewer business insolvencies, but still just as many “zombies”
The number of insolvencies in France has continued to decline: -8,3% year-on-year to end of January, a performance made possible thanks to the construction sector, which contributes to half of the recorded decrease. This trend should go on until the end of the year, with a decline forecast at 3,6% in 2018. However, a turning point is to be expected, as the French economy should reach a peak in the cycle, just like other advanced economies. The insolvency rate, despite its historically low level, must be nuanced: the proportion of “zombie” companies has grown in recent years, feeding from low interest rates encouraging the use of low-cost loans as an “intravenous drip”.
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