2024

Bank

United

<p>An unprecedented crisis is shaking the global economy today: large companies, often seen as pillars of stability, are faltering under the weight of record failures. In the third quarter of 2024, 127 companies, each with a turnover exceeding 50 million euros, declared bankruptcy. This statistic far exceeds the averages observed before the pandemic, revealing a critical acceleration of economic fragilities. Such a phenomenon is set against a backdrop marked by the aftereffects of the health crisis and a rapid rise in interest rates, two factors that have severely tested the cash flows of businesses. At the same time, the end of the support measures implemented during Covid-19 has exposed many companies to increased costs and unavoidable restructuring. These failures, particularly concentrated in Europe, raise questions about the structural limits of certain sectors and the capacity of businesses to confront a rapidly changing economic environment.</p> 
<h2 id="h-a-pessimistic-record-business-failures-in-numbers">A pessimistic record : business failures in numbers</h2> 
<p>In the third quarter of 2024, the number of <a href="https://www.cointribune.com/en/economy-business-bankruptcies-are-skyrocketing-in-france/" target="_blank" rel="noreferrer noopener">large companies declared bankrupt</a> reached 127 cases, a figure that far exceeds the levels observed before the pandemic. According to a study published on October 15, 2024, by Allianz Trade, this increase represents an additional 42 cases compared to the pre-2020 average. “We are likely experiencing a record year since we started monitoring these data,” <a href="https://www.allianz-trade.fr/actualites/defaillances-entreprises-2024-2025.html#:~:text=Allianz%20Trade%20confirme%20une%20forte,des%20niveaux%20%C3%A9lev%C3%A9s%20en%202026." target="_blank" rel="noreferrer noopener">declared</a> Maxime Lemerle, senior analyst of failures at Allianz Trade. By extending the analysis to the first three quarters of the year, the toll rises to 344 companies that have ceased operations, a figure that exceeds those recorded during several years marked by economic crises, notably between 2015 and 2019.</p>
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<p>This wave of failures is partly explained by the rapid and prolonged rise in interest rates. The monetary tightening has increased the financial burdens on many companies, particularly affecting already fragile sectors such as construction and retail. At the same time, the end of the economic support measures established during the pandemic deprived many companies of an essential buffer against their financial difficulties. These conditions have exacerbated the vulnerability of businesses that have not adapted to market changes. Among the emblematic examples, the Tupperware group, once an industrial leader, has been severely weakened by a late shift to online commerce. This case illustrates a broader trend: the inability of certain companies to anticipate structural changes in their sector.</p> 
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<h2 id="the-regional-and-sectoral-impacts-of-a-global-crisis">The regional and sectoral impacts of a global crisis</h2> 
<p>Western Europe remains the most affected region by this wave of failures, with 276 cases out of 436 recorded over the last four quarters. This predominance reflects a particularly tense economic situation on the continent, where high energy costs and supply chain tensions have exacerbated the difficulties faced by businesses. However, the crisis is not limited to Europe. In North America, 73 large companies have also been hit, marking a reversal after a decade of continuous decline in bankruptcies. Projections by Allianz Trade <a href="https://www.allianz-trade.fr/content/dam/onemarketing/aztrade/allianz-trade_fr/news/151024/15-10-2024-Global-insolvencies-AZT.pdf" target="_blank" rel="noreferrer noopener">indicate</a> a 12 % increase in failures in the United States, a clear indicator of economic deterioration. In the Asia-Pacific region, failures have affected 62 companies, primarily due to pressure on the already weakened Chinese real estate sector, exacerbated by tighter credit conditions.</p> 
<p>Beyond the numbers, the human and economic consequences of this crisis are substantial. In Europe and North America, nearly 1.6 million jobs are directly threatened by these bankruptcies, a situation that risks worsening social inequalities and increasing tensions in the labor market. Subcontractors and suppliers, who often depend on large companies, are in turn experiencing a major financial impact, amplifying the cascading effects on regional economic ecosystems. Thus, the Bank of France also anticipates a worsening situation in 2025, with an estimate of 67,000 failures in France. These forecasts reinforce the urgency of a coordinated economic response to limit the extent of the damage and stabilize the most exposed sectors.</p> 
<p>The record failures of large companies raise questions about the ability of global economies to overcome systemic crises of this magnitude. If <a href="https://www.cointribune.com/en/tensions-at-the-fed-interest-rates-ignite-the-financial-debate/" target="_blank" rel="noreferrer noopener">pressures related to high interest rates</a> and increased costs persist, many experts anticipate a growing impact on SMEs and other strategic sectors. This situation, amplified by the structural changes in several industries, underscores the necessity for companies to reassess their operational models and enhance their flexibility in the face of economic shocks. More than just a warning, this crisis represents a major shift in how to approach risk management and resilience on a global scale. Without rapid and coordinated actions, the risk of a domino effect could jeopardize a sustainable economic recovery.</p>

Corporate Bankruptcies Hit Alarming Peak In 2024

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