Economy: An unprecedented wave of bankruptcies hits large companies

An unprecedented crisis is shaking the global economy today: large companies, often seen as pillars of stability, are teetering under the weight of record failures. In the third quarter of 2024, 127 companies, each with a turnover of more than 50 million euros, declared bankruptcy. This statistic far exceeds the averages observed before the pandemic, which reveals a critical acceleration of economic fragilities. Such a phenomenon takes place in a context marked by the after-effects of the health crisis and a rapid rise in interest rates, two factors having put a strain on company cash flow. At the same time, the end of the support measures put in place during Covid-19 exposed many companies to increased costs and unavoidable restructuring. These failures, particularly concentrated in Europe, raise the question of the structural limits of certain sectors and the capacity of companies to face a rapidly changing economic environment.

A pessimistic record: business failures in figures

In the third quarter of 2024, the number of large companies declared bankrupt reached 127 cases, a figure that far exceeds levels seen before the pandemic. According to a study published on October 15, 2024 by Allianz Trade, this increase represents an increase of 42 additional cases compared to the pre-2020 average. “We are likely in for a record year since we started monitoring this data,” said Maxime Lemerle, senior defaults analyst at Allianz Trade. Thanks to the extension of the analysis to the first three quarters of the year, the balance sheet rises to 344 companies having ceased their activities, a figure which exceeds those recorded during several years marked by economic crises, notably between 2015 and 2019.

This wave of defaults is partly explained by the rapid and prolonged rise in interest rates. Monetary tightening has increased the financial burdens of many businesses, particularly affecting already fragile sectors such as construction and retail. At the same time, the end of economic support measures introduced during the pandemic has deprived many companies of an essential shock absorber in the face of their financial difficulties. These conditions have exacerbated the vulnerability of businesses that have failed to adapt to market changes. Among the emblematic examples, the Tupperware group, once an industrial leader, was significantly weakened by a late shift towards online commerce. This case illustrates a broader trend: the inability of certain companies to anticipate structural changes in their sector.

The regional and sectoral impacts of a global crisis

Western Europe remains the region most impacted 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 tensions on supply chains have worsened the difficulties of businesses. However, the crisis is not limited to Europe. In North America, 73 large companies were also hit, which represents a reversal of trend after a decade of continuous decline in bankruptcies. Allianz Trade projections indicate a 12% increase in insolvencies for the United States, a clear indicator of economic deterioration. In Asia-Pacific, failures affected 62 companies, mainly due to pressure on the Chinese real estate sector, already weakened by tighter credit conditions.

Beyond the figures, the human and economic consequences of this crisis are considerable. In Europe and North America, nearly 1.6 million jobs are directly threatened by these bankruptcies, a situation which risks worsening social inequalities and increasing tensions on the labor market. Subcontractors and suppliers, who often depend on large companies, in turn suffer a major financial impact, amplifying the cascading effects on regional economic ecosystems. Thus, the Banque de France also forecasts a worsening of the situation in 2025, with an estimate of 67,000 failures in France. These prospects reinforce the urgency of a concerted economic response to limit the extent of the damage and stabilize the most exposed sectors.

The record failures of large companies call into question the capacity of global economies to overcome systemic crises of this magnitude. If pressures from high interest rates 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, highlights the need for companies to review their operating models and strengthen their flexibility in the face of economic shocks. More than just a warning, this crisis constitutes a major shift in the way we approach risk management and resilience on a global scale. Without rapid and coordinated action, the risk of a domino effect could jeopardize a lasting economic recovery.

Luc Jose A.

A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I took the commitment to raise awareness and inform the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. I strive every day to provide an objective analysis of current events, to decipher market trends, to relay the latest technological innovations and to put into perspective the economic and societal issues of this ongoing revolution.