They now have different classmates they don't have a connection with, they enter the new class having as their identity "the person who failed the previous year", and they'll probably have to sit bored in the classes of other subjects they did pass.
It's almost guaranteed to result in lower engagement.
I'm not denying the opposite is also bad btw. Skipping works sometimes for subjects like history where you'll encounter different topics the next year, but math is impossible to advance without a foundation, and sciences depend on it.
The only good answer is probably breaking the factory-system for schools, where students of the same age are batches going through a pipeline. having students of different levels mixed together like in victorian schools, being able to advance per-subject, something like that.