New data from credit risk analyst CRIFVision-Net has revealed that the number of company insolvencies in Ireland has increased by 70% year-on-year in the first quarter of 2023. The data shows that insolvencies have risen across ten counties, with sectors such as hospitality, manufacturing, retail, computers, construction and leasing all recording significant increases in this avenue of closure for businesses. The data also shows that insolvencies are up in 12 out of the 16 sectors analysed, with only legal, accounting and business, real estate, electricity, gas and water supply and mining decreasing year-on-year compared with 2022.
Managing Director of CRIFVision-net, Christine Cullen, said that start-ups have faced tough economic challenges in the first three months of this year, which really started to take hold in the same three month period in 2022 following the invasion of Ukraine. Since then, a combination of a rising cost of living, energy insecurity and further geopolitical uncertainty has fed through to the start-up sector where the effect on hospitality and retail is starting to show. Ms Cullen continued to say that “2022 was the lowest point for the number of new start-ups in Ireland in six years with a -16% change on 2021. Q1 of this year has started weaker than last year which suggests some challenging times ahead.”
The data shows a month-on-month decrease of 0.8% in the number of start-ups during the three-month period for 2023 when compared with January, February, and March of last year. Despite the dramatic rise in insolvencies, the number of companies dissolved for the three-month period has decreased by 4% compared to the same period last year. Additionally, March this year alone saw 2,013 new company start-ups, an increase of 233 when compared with 1,780 for the same month last year. About half of the counties in the Republic of Ireland experienced a year-on-year increase in new company registrations in Q1 2023. Increases in the number of start-ups were seen in just eight industries in Q1, including public administration and defence, fishing, agriculture, electricity, gas and water supply, health and social work and real estate.
Hospitality saw no change in the number of new start-ups during Q1 of 2023 compared with the same period last year but saw 23 company insolvencies in the first three months of 2023 vs the same period of 2022. The data shows 9 less start-ups in the construction trade compared to Q1 last year, while there were 84 less start-ups in legal, accounting and business and 28 less in manufacturing. Cork saw a total of 598 new start-ups (-2%), Limerick recorded 174 (-9%), but Galway recorded 219, up 13 for the first three months of last year.
Kildare, Wicklow, Mayo, Meath, Sligo and Clare recorded the highest year-on-year increase for insolvencies in the first quarter. Across urban areas, only Limerick recorded a decrease in insolvency closures. Dublin, Cork and Galway all saw significant increases in the number of business insolvencies year-on-year. Kerry, Kilkenny and Tipperary were the only other counties to record a decrease for insolvencies.
The data suggests that inflationary pressures have added further concern for businesses. Start-ups have been hit hard by the rising cost of living, energy insecurity and geopolitical uncertainty. With insolvencies up in 12 out of 16 sectors, it is clear that businesses are facing significant challenges in the current economic climate. However, despite the rise in insolvencies, the number of new start-ups is still increasing in some areas, indicating that there is still potential for growth and development in the Irish economy.