Cork’s Business Insolvencies Surge by 65% in a ‘Challenging’ First Half

“Insolvencies Surge by Nearly 50% in First Half of 2023 Amidst Inflation and Government Support Wind-Down”
Cork's Business Insolvencies Surge by 65% in a 'Challenging' First Half

Insolvency numbers in Ireland have surged by almost 50% in the first half of 2023, as inflationary pressures and the winding down of government pandemic supports take their toll. According to credit risk analyst CRIFVision-Net, there were 410 insolvencies reported nationwide between January and June, compared to just 277 in the same period last year. Cork experienced the highest increase in business closures, rising by 65%, while Dublin saw a more modest 35% rise.

The closure of “zombie businesses” that relied on government support coincided with the European Central Bank’s decision to raise interest rates in order to combat inflation. Sectors such as hospitality and construction were particularly affected. Nevertheless, Limerick bucked the trend with a 43% decrease in insolvencies, while Galway also saw a significant decline of almost 20%.

On a more positive note, there was a 7% increase in start-ups during the first half of 2023, with 20 counties reporting year-on-year growth. Key economic centers such as Dublin, Cork, and Galway benefited from this trend, with over 2,527 new start-ups reported in May alone. Galway experienced the largest increase in start-up activity, recording an 8% growth, while Dublin and Cork saw growth rates of 7% and 5% respectively. Limerick, however, saw a decrease of 6% in new start-ups, making it the only large urban area to exhibit a decline.

Various sectors, including hospitality, real estate, IT, financial services, and construction, all benefited from the rise in start-up activity. However, CRIFVision-Net noted that this growth was measured from a relatively low baseline in 2022. While some industries saw growth rates as high as 12%, manufacturing experienced a 9% decline in new businesses.

Christine Cullen, Managing Director of CRIFVision-Net, commented on the figures, acknowledging the complexity of interpreting the data in light of global economic uncertainty, high interest rates, and a rising cost of living. She highlighted the resilience of the Irish economy, with increased corporate tax receipts and an €8bn budget surplus. However, Cullen emphasized that the rise in insolvencies serves as a reminder that the headline numbers do not tell the full story.