The number of company insolvencies in Ireland increased by 70% year-on-year in the first three months of 2023, part of a trend seen across key sectors, according to the latest figures from credit risk analyst CRIFVision-Net.
The year-on-year data for January, February and March suggest that inflationary pressures have added further concern for businesses, with a rise in insolvencies in ten counties.
Economic bellweather sectors such as hospitality (767%), manufacturing (375%), retail (167%), computers (125%), construction (117%) and leasing (67%) all recorded significant increases in this avenue of closure for businesses, CRIFVision-net revealed.
“Q1 of this year has started weaker than last year which suggests some challenging times ahead”
Insolvencies are up in 12 out of the 16 sectors analysed, with only legal, accounting and business (-29%), real estate (-82%), electricity, gas and water supply (-100%) and mining (-100%) decreasing YoY compared with 2022.
Kildare (600%), Wicklow (600%), Mayo (300%), Meath (300%), Sligo (300%) and Clare (200%) recorded the highest year-on-year increase for insolvencies in Q1.
Of the urban hubs, only Limerick (-20%) recorded a decrease in insolvency closures. Dublin (51%), Cork (157%), Galway (20%) all saw significant increases in the number of business insolvencies year-on-year.
Kerry (-33%), Kilkenny (-50%), Tipperary (-50%) were the only other counties to record a decrease for insolvencies.
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.
Cautious bright sparks
A bright spark in the data was seen in the number of companies dissolved for the three-month period, which have decreased by 4% compared to the same period last year (Q1 2023 vs Q1 2022).
While 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.
A total of 13 counties, or half of the counties in the Republic of Ireland experienced a year-on-year increase in new company registrations in Q1 2023.
Roscommon saw a total of 20 new start-ups YoY, recording the highest percentage growth at 57%, while Sligo recorded 18 (50%), Offaly recorded 20 (43%), Kilkenny recorded 29 (36%), Cavan recorded 13 (20%) and Kerry recorded 25 (20%).
Increases in the number of start-ups were seen in just eight industries in Q1, including public administration and defence (160%), fishing (120%), agriculture (43%), electricity, gas and water supply (11%), health and social work (11%) and real estate (4%).
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.
Regional overview: Q1 2023 vs Q1 2022
Although Dublin accounted for the largest number of new start-ups nationwide in Q1, recording a total of 2,306 registrations, the number was still a -3% YoY contraction, falling by 77 registrations when compared with Q1 2022.
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.
The counties to record the highest percentage YoY decrease in the period were Leitrim (-34%), Clare (-19%), Meath (-19%), Laois (-16%) and Longford (-16%).
“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,” said Christine Cullen, managing director of CRIFVision-net.
“Since then we have faced a combination of a rising cost of living, energy insecurity and further geopolitical uncertainty. This economic headwind has fed through to the start-up sector where the effect on bellweathers like hospitality and retail is starting to show.
“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.
“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.”