a dangerous cocktail for the cash flow of French companies

Bad news is piling up for the barely re-elected Emmanuel Macron. After Insee on Monday The Bank of France also expects weak growth in the second quarter at around 0.2%.. More than two months after Russia’s entry into the war in Ukraine, the economic impact of that conflict is spilling over into much of the tricolor economy.

As a result, companies are beginning to sound the alarm. “It’s not brilliant, but after a shock like (the war in Ukraine), it’s resilient,” commented on Wednesday the governor Bank of FranceFran├žois Villeroy de Gallo on the antenna France Inter, pointing out that “Activity and employment persist, but inflation rises sharply.” Economics Minister Bruno Le Maire now expects a difficult summer. “The hardest part is ahead” he said during a trip to Evreux last week.

Bruno Le Maire sounds the alarm: “We are in for the most difficult” at the economic level

Future deterioration of cash

In the Bpifrance and Rexecode barometer released this Wednesday morning, nearly half (49%) of managers report an increase in cash flow problems between January and March and expect further tension in the second quarter. Due to rising raw material costs and supply constraints, industries dependent on foreign countries continue to experience severe turmoil after two long years of the pandemic.

In terms of publicly guaranteed loans (PGE), 16% of the 700,000 companies that requested this assistance have already repaid their loan in full, according to data from the Ministry of Economy and Finance and the French Banking Federation (FBF). At the same time, the vast majority of managers (78%) surveyed by Rexecode indicate that they intend to amortize it within a few years. A slowdown in the French economy could exacerbate repayment difficulties.

War in Ukraine: Toward a More Complicated PGE Compensation?

Supply chain difficulties explode

A series of crises in recent years (pandemic, war in Ukraine) has disrupted supply chains in world trade. Adding to all these crises is China’s zero-spread Covid policy in recent weeks and the restrictions imposed by the authorities.

In addition, almost half (49%) of French leaders fear a prolongation of the significant impact of the war in Ukraine on rising prices (non-energy raw materials and energy) and further difficulties in supply chains related, in particular, to longer delivery. time, shortage or transportation cost. After all, producer prices in industry are rising.

Automotive industry and live equipment

According to forecasts from the Bank of France, industrial activity remained broadly stable in April. Behind this stability, however, are sectoral contrasts. Pharmaceutical and chemical industries record an increase in their activity, while the automotive industry continues to fall. The hardware sector has been hit hard by the containment measures in China and the blockade of the port of Shanghai.

Most of the French companies specializing in computer and electronic products, machinery and equipment, and electrical equipment are largely dependent on Asia to be able to support their production.

Covid-19: Shanghai containment will ‘severely punish’ freight

Services are working well

On the other hand, the tertiary sector should do well in the coming weeks. Most service sectors are counting on increased activity, especially in accommodation, temporary work or even business consulting. Given the weight of the tertiary sector in the French economy, summer growth should be driven largely by services.


Most forecasting institutions have revised down their growth forecasts for 2022. The International Monetary Fund (IMF) now expects 2022 activity to rise by 2.9% in its latest spring forecast, up from 3.5% in its previous estimates. For its part, the government, which is currently preparing a budget amendment for the coming weeks, should also revise downward its 2022 growth figures, which are currently still set at 4%.

Russia’s war in Ukraine is rocking Europe’s economy, IMF says