War in the Middle East: French SMBs still spared from a major degradation, according to a study.

Companies do indeed note an impact from the war, mostly related to the rise in energy costs. But this burden remains limited for now.

French TPE/PME bosses remain optimistic about their cash flow and investment intentions, despite the conflict in the Middle East, which still has a negative impact, according to a study published on Tuesday, May 19th.

Opinions on their cash flow from the leaders surveyed for this Bpifrance Le Lab and Rexecode barometer from April 13 to 26, six to eight weeks after the start of the war, are stable on current cash flow or even slightly improving for the next three months. As such, investment intentions for this year are up by one point compared to the previous quarter.

“No major degradation on these two points this quarter, it’s a little surprising,” notes Baptiste Thornary, head of macroeconomics at Bpifrance, to AFP. However, 62% of company executives say they see a negative impact of the conflict on their cash flow or results. But only 25% mention a “significant” impact, with sectoral differences, with transportation being the most affected.

For 76% of affected companies, the difficulties come from rising costs, energy-related or not. But 69% of affected TPE-PMEs announce their intention to pass on all or part of this increase in their selling prices.

Inflation surge?

This could be an additional factor in inflation, as the increase in consumer prices – +2.2% in April year-on-year, compared to less than 1% before the war – was almost entirely due to the rise in energy prices alone.

The barometer also looks at the progress of artificial intelligence (AI) in TPE/PME. Now, 58% of companies say they use AI tools , but mostly (34%) as initiatives from employees without a formal framework. However, 35% of TPE/PMEs do not intend to use AI in the near future. Its effects are starting to show: 43% of executives see a positive impact on employee productivity, 8% on revenue (compared to 1% negative), and the prospects are even better by 2030.

The feared job bloodletting is not certain: 6% of executives currently report a decrease in their workforce due to AI, and 1% report an increase. By 2030, 18% anticipate a decrease, but 6% anticipate an increase.

Company leaders, as summarized by Bpifrance’s director of studies Philippe Mutricy, “do not seem to be in the mindset of using AI to lay off employees to increase profitability, but rather to gain growth and strengthen competitiveness.”