Business failures continue to decline in September and October

The confinement affected the functioning of commercial jurisdictions, and the adaptation of regulations to the health crisis by temporarily granting additional delays.

Business failures continued to decline in September, by 30.5% over one year, mainly due to the modification of the rules for declaring insolvency during the crisis, the Banque de France said on Thursday.

In total, 36,537 failures were recorded during the month of September, against 52,569 during the same month in 2019, this decline being observed in all sectors, according to the press release. The trend would be confirmed in October, with a drop in insolvencies of 34.3%, according to provisional data.

«In the context of the health crisis of the Covid-19 epidemic, at a time when economic activity is suddenly slowing down, putting a large number of businesses in difficulty, the number of business failures is paradoxically down sharply», Underlines the French central bank.

It indicates that “this is explained both by the period of confinement which affected the functioning of commercial courts, and by the adaptation of the regulations which temporarily grant additional periods both for assessing the state of suspension of payments and for declaring it.».

The Banque de France notes that “the gradual exit from these temporary provisions results in an observable trend reversal on the data calculated on average over three rolling months».

In seasonally adjusted data, the average number of failures from July to September increases by 51.9% compared to the average number from April to June, which partly includes the confinement period, says the bank. “However, the number of failures recorded over the last three months under review remains nearly 40% lower than that observed over the same period in 2018 and 2019.», She specifies.

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