The economic crisis caused by the COVID-19 pandemic heralded major business failures and insolvencies across the eurozone. But, in 2020, and even if the real impact of the COVID-19 crisis remains uncertain, the number of insolvencies actually fell in all major European economies.

According to research by Coface, a leading player in credit insurance, the gap between the expected deterioration of the companies’ financial health and the number of insolvencies suggests that there is a high number of “hidden insolvencies” that have been postponed, rather than prevented. This suggest that, in both France and Europe, there is high number of unviable companies whose failure is only a matter of time.

Not all of the hidden insolvencies are expected to manifest in 2021. The continuity of insolvency moratoriums, aid measures, and support from banks will be decisive. The insolvency “catch-up” process from 2021 onwards will directly correlate with the rate at which restrictive measures end, which in turn will be determined by the speed at which vaccinations are rolled out. This process will also depend on states’ willingness to continue providing support, especially as the vast majority of companies will only begin to repay state-guaranteed loans from 2022 (as is the case in France, for example).