The business activity of French SMEs is once again expected to slow in 2024, against a backdrop of weak demand.
The balance of opinion on turnover was down 10 points year-on-year to +2, well below its historical average, while order books remain lean. The climate is particularly difficult for Construction, Commerce and Transport, and sluggish in Industry, while services are faring better. Employment is expected to hold up better than business activity again this year, particularly in Industry
Cash flow is stabilising.
The indicator for recent changes in cash flow, steadily deteriorating since reaching its high point in 2021, has stopped falling and is now above its long-term average. A quarter of SMEs consider their cash position to be difficult, a proportion that has remained stable over the past year. Fears of nonrepayment of State Guaranteed Loans (SGL) remained stable, at 4% of SMEs that have obtained an SGL. Repayments are also accelerating, with 19% stating they have already repaid their loan in full (up 3 points in 6 months) and 10% planning to repay their loan in full by the end of 2024.
Credit conditions remain favourable. Weak demand is once again the main obstacle to investment, ahead of the cost of credit.
Access to credit, which had tightened since the end of 2021, stabilised at the beginning of 2024 and even eased slightly on the investment credit side. The cost of credit, which at the end of 2023 had become the top obstacle to investment due to the surge in interest rates offered to SMEs (from 1.4% in April 2022 to 5.2% in December 2023), remains a major obstacle. However, it is less potent than in the previous half-year (cited as an obstacle by 49% of managers in May 2024, compared with 56% in November 2023), while interest rates offered to SMEs have begun to fall (to 4.9% in April 2024). Weak demand is once again the main brake on investment (52%).
Investment is expected to continue its slowdown this year.
43% of SMEs have already invested or plan to invest in 2024, a proportion down 2 points over 1 year. The capital expenditure indicator lost 6 points year-on-year, to -9, and is now below its long-term average (-4). Industry is performing well, with 57% of managers planning to invest, a proportion not only higher than in the other sectors, but also close to its long-term average, unlike the other sectors.
Green investments are also slowing.
28% of SMEs made such investments in 2023, a proportion down 7 points year-on-year and 14 points over 2 years. The balance of opinion on the change in amounts invested this year fell 3 points year-on-year to +2. When asked about their intentions beyond 2024, only 26% plan to invest. Despite this weaker enthusiasm for green investments, the greening of the car fleet is making progress. Currently, 4% of company vehicles are electric. Few SMEs have already started to electrify their vehicle fleets (1/10). Those that have done so have relatively more vehicles and have electrified around 1/5 of their fleet. Over the next 12 months, 16% of vehicles purchased (or leased) will be electric. More than three-quarters of the SMEs planning to buy an electric vehicle within the year currently have no electric vehicles in their fleet. Range and purchase price are the main deterrents to the acquisition of electric company vehicles.
Business activity is expected to remain sluggish in 2025.
The business outlook indicator has stabilised at +16, masking sectoral disparities. The outlook has deteriorated in Tourism and Transport in particular and remains gloomy in Construction and Commerce. On the other hand, it has improved in Industry and remains relatively healthy in Services. Employment is expected to remain more buoyant than business activity, with the forecast indicator close to its historical average, while the business activity indicator is well below it.
