21,924 businesses were formed in 2020, the lowest number on record since 2016, according to CRIFVision-net. However, entrepreneurs are proving to be more resilient and optimistic than previous downturns.
Ireland’s new company start-up levels reached their lowest point in four years in 2020 due to the Covid-19 pandemic.
The annual figures released today (18 January) from credit risk analyst CRIFVision-net reveal that a total of 21,924 new start-ups were registered in 2020, the lowest figure on record since 2016 (21,018). This marks an overall decrease of 4pc in new registrations when compared to 2019.
“While restrictions are important now, we must ensure that we are simultaneously developing a sustainable environment in which businesses can recover”
According to the data, the second quarter of the year recorded the lowest number of company start-ups (3,998, April–June). April 2020 was the worst month for start-ups (1,075) since December 2012 (992).
Despite the overall decrease in activity among the start-up community in 2020, there have been early signs of regrowth, with levels increasing from June (1,701).
The final quarter of the year proved particularly strong, marking an increase of 20pc in new registrations compared to Q3. In total, 6,583 new companies were registered in Q4, a 23pc increase on the same period in 2019.
These figures reveal that despite the Covid-19 economic downturn, start-ups have remained more resilient when compared to the 2008 recession where figures decreased by 22pc year-on-year for 2008 (18,696 start-ups, 2007 vs 14,603 start-ups, 2008).
Regions and sectors
From a regional perspective Leitrim experienced the largest percentage decrease, recording a total of 55 new companies in 2020, down 41pc when compared to 2019. Leitrim was followed by Meath (-39pc, 629), Clare (-33pc, 401), and Cavan (-24pc, 213). Mayo (+4pc, 345) and Tipperary (+6pc, 461) were the only two counties to record a percentage increase.
And from a sectoral point of view, the fishing sector (-42pc, 28) recorded the biggest drop in new company start-ups in 2020. Fishing was followed by leasing (-39pc, 411), utilities (-17pc, 151), and hospitality (-14pc, 1,111).
The legal, accounting, and business sector was the biggest contributor to new company start-ups in 2020, accounting for 4,401 registrations. This, however, marks a 6pc decrease for the sector when compared to 2019.
“Given the unpredictable nature of the Covid-19 pandemic, it is difficult to measure the full economic impact of restrictions and lockdowns,” explained Christine Cullen, managing director of CRIFVision-net.
“However, as we approach almost a full year since the first case of Covid-19 was confirmed in Ireland, there is a lot that we can learn in terms of trends and changes.
“According to our latest figures, 2020 was the lowest point for the number of new start-up companies in Ireland since 2016, with a noticeable decline in activity from the second quarter of the year. The correlation between this decline and the first Covid-19 lockdown is a clear indicator of the immediate impact that the national lockdown had on new business creation.”
Cullen pointed out that from the early stages of the pandemic, the Government was quick to provide support for SMEs and new business start-ups, introducing a range of measures that have been consistently extended and adapted in line with Covid-19 developments.
“While these supports have played a vital role in facilitating early recovery, the concern now is that the return to lockdown restrictions will reverse the progress that has been made so far.
“The impact of prolonged closures and restrictions on businesses has been well documented over the course of the pandemic, and while restrictions are important now, we must ensure that we are simultaneously developing a sustainable environment in which businesses can recover.
“SMEs account for 99pc of all businesses in Ireland. They will play a massive role in the overall recovery of the economy. The focus must therefore remain on ensuring there are supports and measures in place to prevent current restrictions undoing the positive recovery seen in new business creation in the final quarter of 2020.”
By John Kennedy (email@example.com)
Published: 18 January 2021