Business failures: are we past peak insolvency?
[September 2025] Our economists, José Bardaji, José Correia, and Julien Laugier, publish a review of business failures in the first eight months of 2025 and offer their outlook for the rest of the year. The number of insolvencies may reach a total of 69,000 by the end of 2025, with around 245,000 jobs at stake.
Macroeconomic environment for businesses
The French economy is confronted with a weakening in demand…
Domestic and foreign demand for French goods and services is losing steam. While demand contributed 2 percentage points (pp) to GDP growth between 2022 and 2024, it slowed significantly in 2025 (−0.6 pp at the end of the second quarter). This weakening in demand stems, in particular, from the almost uninterrupted rise in the household savings rate, which has continued to reach record levels quarter after quarter (except during the COVID period).
… which is reflected, in particular, in the growing financing needs of non-financial companies
In this unfavorable business environment, non-financial corporations (NFCs) are witnessing a deterioration in their economic ratios. First, this lackluster business performance is triggering a squeeze on profit margins against a background of continuing strong wage growth. Second, the savings rate of NFCs is also deteriorating, a trend further exacerbated by higher interest costs. Finally, as a corollary, companies recorded a need for financing in the first half of 2025 for the first time in two years owing to the negative impact of storage costs on cash flows.
The burden of political uncertainty
While economic activity is expected to remain resilient in the second half of the year, the degree of uncertainty appears to be at its maximum, driven by political instability and fresh tensions during the adoption of a budget for the French economy. Such an environment is likely to cause firms to reconsider their development, investment, and recruitment plans, thereby postponing the awaited drop in the number of business failures.
Diagnosis of business failures at the end of August 2025
Have we reached peak insolvency?
In 2025, the number of business failures continued to rise, exceeding 68,000 for the first time in 15 years (68,400 in August, representing a 12-month aggregate). The year 2025 is also marked, however, by a slowdown in the volume of insolvencies; over the first eight months of the year the increase in bankruptcies was reduced to 3% after double‑digit increases in the preceding two years (+38% in 2023 and +21% in 2024).
68,400 business failures by August 2025 (12-month aggregate)
Downward trend in the number of jobs at risk
In August 2025, 253,000 jobs were at risk owing to business failures over a 12-month period, representing a 9% decrease compared with August 2024. Although slightly down, the number of jobs at risk remains at a high level. What’s more, the additional jobs at risk over the past three years exceed the lower number of jobs at risk recorded over the period 2020-2022. Here too, the number of jobs at risk depends on the type of company. Over a 10-year period, the number of jobs at risk has increased by +32% overall. For intermediate-sized enterprises, however, the increase is twice as high (+64%, compared with +11% for very small companies).
Finally, differences between industrial sectors remain particularly significant. The proportion of jobs threatened by business failures in the construction and transport and storage sectors is high at 23%, while these sectors account for 16% of total jobs in the French economy. Conversely, trade and business services are less severely affected with 32% of jobs at risk in these two sectors, while they account for a much larger proportion of total jobs (40%) in the French economy.
While 68,400 business failures were recorded in August 2025, BPCE L’Observatoire forecasts 69,000 insolvencies for the whole of 2025, a +3% increase compared with 2024. The forecast made in January has therefore been revised slightly upwards (+1,000 bankruptcies), taking into account the latest available figures and the outlook for the rest of the year. However, the economic impact of these bankruptcies is expected to threaten around 245,000 jobs, a decline of 7% compared with 2024 when two large groups became insolvent.
69,000 businesses are expected fail in 2025 as a whole
The outlook for business activity therefore remains fragile for micro-enterprises and SMEs in the coming months, penalized by sluggish household consumption, declining investment, and political and budgetary uncertainty, which adds an unknown factor that further complicates the financial equation for business leaders. What is more, longer payment terms, higher borrowing costs, and COVID debt repayments (including state-guaranteed loans) are weighing down on companies’ financial stability. According to BPI France, approximately 4% of managers still in the process of repaying state-guaranteed loans say they fear they will find it impossible to reimburse these loans (a percentage that has remained stable, however, since the first estimates were made in 2021).
Analysis of the insolvency rate
The demographics of business organizations are very dynamic, including for incorporated companies
Failures are one of the links in the chain of business demographics, which have remained very dynamic for several years. In 2024, there were 5.9 million businesses in France. This number has grown by an average of nearly 5% per year over the past five years, which is one percentage point higher than the rate recorded over the previous five years. Sole proprietorships account for just over half of all businesses (54%), a proportion that has risen slightly over the years.
5.9 million The number of businesses in France in 2024
In ten years, the number of new business creations has doubled, as has the number of closures. In 2024, just over 1.1 million businesses were set up. The start-up rate therefore stands at 19%. Stable over the last five years, it is significantly higher for sole proprietorships than for incorporated companies (26% versus 11%). At the same time, nearly 900,000 businesses ceased trading. The closure rate, at 15%, is increasing year after year and remains almost three times higher for sole proprietorships than for incorporated companies (22% versus 7%). . The average lifespan is therefore estimated at 4.6 years for sole proprietorships and 13.6 years for corporations.
The growth in the number of businesses (+48% over the past ten years) is thus significantly higher than other indicators of the French economy in terms of volume, such as added value (+13%) and employment (+11%). This growth in the number of businesses is chiefly driven by micro-enterprises (+65% for those with no employees), while it is three times lower for companies with 50 or more employees (+22%).
The insolvency rate remains low… except for medium- or intermediate-sized businesses!
Knowing the number of businesses makes it possible to calculate an insolvency rate. This rate stands at 1.1% in 2025, a low level identical to that observed in 2024 and 2019! The rise in the business failure rate since the low point of 0.5% in 2021 is concomitant with a deteriorating economic situation, with GDP growth below its potential and a catch-up effect from business failures that were put on hold during the COVID period.
The analysis of the failure rate by company size reveals three key findings:
Have the lower insolvency rates observed during the COVID years been offset by the increases recorded in subsequent years? For micro-enterprises, this is not the case. With a difference of 2.6 percentage points, the failure rate remains significantly lower than it would have been without this exceptional period. For SMEs and intermediate-sized enterprises, this is the case, with the gap almost entirely closed. In the near future, the insolvency rate is expected to continue to rise.
There are many regional disparities, with some regions accumulating multiple vulnerabilities and high, and rising, insolvency rates.
In 2025, the failure rate for SMEs and intermediate-sized enterprises stands at 2.1% nationally. The rate in certain regions falls below this: Basse-Normandie (1.2%), Franche-Comté, Brittany (1.5%), Alsace, and Pays-de-la-Loire (1.6%). Others are above this level, including French overseas departments (between 2.6% and 4.0%) and Île-de-France at 2.7%.
Between 2019 and 2025, the trends are also particularly mixed. At the national level, the failure rate for SMEs and intermediate-sized enterprises rose by +0.7 percentage points (pp). In some regions, it remained virtually unchanged: Limousin (−0.2 pp), Basse-Normandie (stable), Bourgogne, Réunion, and Centre-Val de Loire (at most +0.2 pp). However, other regions are facing significant increases in the insolvency rate: Martinique, Poitou-Charentes, and Guadeloupe (between +1.5 pp and +1.7 pp over the same period).
