Brussels, January 24 (QNA) - France, Europe's second largest economy, needs to weather many storms in 2024 before its economy reaches a stable point, Euronews network said.

Banque de France, the central bank in France, recently announced that there is a worrying increase in corporate bankruptcies during 2023, as the number jumped to more than 55,000, a level that the country has not witnessed since 2017.

The significant increase in closure is attributed to inflation, especially in the energy sector and rising interest rates, resulting in increased operating costs for companies.

Euronews said, in report, that "French manufacturing worsened towards the year end and, with the level of ongoing geopolitical uncertainty at present, its recovery will not be smooth... The French manufacturing sector remained low throughout the year, sinking deeper at the end of 2023. If output remains at the same level, there is the possibility of a technical recession within the sector." Due to various factors such as the decline in productions, worsened purchasing activity, capacity pressures and falling outputs, the sector may face unemployment and a downward spiral.

Euronews also touched upon labor shortage in France, saying that it is one of the most common challenges of the economic sector in the country. A European Commission report published in July 2023 said that shortages "are expected to persist in both high skills and low skills occupations, driven by the creation of new jobs and the need to replace workers who retire".

A solution to the problem is to rely on the migrant labor force whose contribution can result in net positive economic and fiscal gains, Euronews said, adding that this is challenged by politicians in the French parliament who approved recent legislation in favor of strict control on migration. This move turns out to be one of the gravest challenges in the way of employing migrants in order to overcome labor shortages.

According to a report issued by Banque de France, there was a staggering 72 percent increase in the number of large companies closing their doors compared to the rate recorded during the previous decade. 

These companies, with their vast workforce and significant contributions to the economy, represent a vital sector that is now under threat, Euronews said, noting that 55,492 companies and establishments have declared bankruptcy in 2023. In another report, Euronews explained that in most cases, the focus is on small and medium-sized companies (55,435 cases), whose number of workers does not exceed 250 people.

The number of medium and large companies whose number of workers exceed 250 people and were closed last year reached 57 companies, which is twice more than in 2022.

The trade and construction sectors, which are mostly made up of small businesses, have felt the brunt of this economic transformation, accounting for 43 percent of all bankruptcies. The extraordinary debt levels across the major economies in the world pose a risk to France, too, as it faces the threat of an austerity budget which directly impacts the financial health of households and consumers. French Finance Minister Bruno Le Maire has announced France will be facing an "austerity budget" in 2024.

In statements to the media, he revealed that, after ruling out tax hikes for the household, the budget contained €16 billion savings to reduce the deficit to 4.4% of economic output this year.

In addition, the budget included €7 billion dedicated to green transition and zero carbon emissions. "The finance minister seemed to overlook the banes of austerity measure and instead emphasized on the economic growth by stating: This budget represents a notable effort, and is the first step on the trajectory of an ambitious plan to restore our public finances," Euronews said.

The network pointed out that if France continues to operate on rising borrowing costs and slowing growth, then there is a real possibility it will run to one of the biggest budget deficits in Europe this year, stressing that the eurozone as a whole will is likely to continue to feel the impact of a global economic slowdown, and the French economy, like other European economies, will need to be vigilant throughout 2024 in order to stabilize the economy. (