Corporate insolvencies soared in the first quarter of the year, and start-up growth slowed in a number of sectors, as rising costs put companies under pressure and economic uncertainty lingered.
Figures from credit risk analyst CRIFVision-Net showed insolvencies rose 70 per cent year on year in the first three months of the year, with key sectors such as hospitality, manufacturing and retail sectors showing dramatic increases.
A separate analysis by PwC, meanwhile, found that there was a 32 per cent decrease in the total number of insolvencies from Q4 2022 to Q1 2023. However, it recorded a 23 per cent rise in the total number of insolvencies when comparing the first quarter of this year with the same period in 2023 - 119 companies compared with 97 last year.
CRIFVision-Net said insolvencies were up in 12 out of the 16 sectors analysed, with only legal, accounting and business, property, gas and water supply and mining reporting better figures than in the same period last year.
Of the urban hubs, only Limerick recorded a decrease in insolvency closures. Dublin, Galway and, most significantly, Cork all saw increases in the number of business insolvencies.
Company start-ups fell 0.8 per cent over the quarter when compared to a year earlier, the data showed, with growth slowing in the number of companies created in construction, retail, legal, accounting and business, motoring, manufacturing and leasing.
“2022 was the lowest point for the number of new start-ups in Ireland in six years with a -16 per cent change on 2021,” said Christine Cullen, managing director of CRIFVision-net. “The first quarter of this year has started weaker than last year which suggests some challenging times ahead.”
Cork saw a 2 per cent decline in new start-ups, at 598, with Dublin down 3 per cent at a total of 2,306 and Limerick 9 per cent lower at 174 start-ups created. Only Galway recorded an increase, at 6 per cent, with 219 start-ups established there in the quarter.
However, March saw a year-on-year increase of 233 new company start-ups, and around half of counties saw an increase in the number of new companies registered, including Roscommon, Sligo, Offaly, Kilkenny, Cavan and Kerry. There were also rises recorded in public administration and defence, fishing, agriculture and real estate.
“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 we have faced a combination of a rising cost of living, energy insecurity and further geopolitical uncertainty,” said Ms Cullen.
“But there is reason for some cautious optimism seen through the decrease in the number of dissolved companies, as well as a marginal increase in the number of new start-ups formed last month when compared with the same month last year.
“Half of all 26 counties recorded an increase in start-up growth in Q1 of this year suggesting a significant entrepreneur resilience in testing economic times and there are still many businesses willing to invest in new ventures.”
