Company start-up growth slowed in all but three sectors, with only social and personal services (+3%) recording a hike.
A 20% year-on-year decease in the number of company start-ups was recorded for the first six months of 2022.
The growing cost-of-living crisis is stirring further uncertainty for businesses post-pandemic, according to the latest figures from credit risk analyst CRIFVision-net.
“There was nonetheless a considerable number of companies still created each month suggesting there are many businesses and entrepreneurs willing to invest in new ventures even though there is a challenging economic backdrop”
The figures suggest that the impact of rising costs has altered business decisions and hit individuals considering starting their own venture, as consumers cut back on discretionary spending and companies limit production due to input costs.
There was a 56% increase in the number of companies dissolved compared to the same period last year (H1 2022 vs Q1 2021).
Only Leitrim, Laois, Longford, Cavan and Mayo recorded growing numbers in company start-ups, with Offaly (-32%), Kerry (-30%) and Sligo (-28%) recording the highest year-on-year decrease.
The half-year data shows that out of the entire six-month period for 2022, only January saw an increase in start-ups compared with the same month last year, while the following five months all produced consecutive terms of contraction.
Start-ups by sector
Decreases were seen in all other industries in the first half of this year, including real estates (-4%), hospitality (-6%), agriculture (-13%), construction (-13%), computers (-28%), manufacturing (-31%), motor (-33%) and retail (-51%). Social and personal services sector (+3%) was the only sector to record growth.
The half-year data shows 1,084 less start-ups in the retail sector compared to H1 2021, while there are 139 less start-ups in manufacturing and 40 less in hospitality, as cost pressures weigh on the industry attempting to rebound from pandemic-inflicted restrictions of recent years.
Start-ups in the regions
A total of 21 counties in the Republic of Ireland experienced a year-on-year decline in new company registrations in H1 2022.
Although Dublin accounted for the largest number of new start-ups nationwide in H1, recording a total of 4,612 registrations, the number was still a 25% YoY decrease. Cork saw a total of 1,084 new start-ups (-20%), Galway recorded 442 (-22%), and Limerick recorded 349 (-9%).
The counties to record the highest percentage YoY decrease in the period were Offaly (-25), Kerry (-30%) and Sligo (-28%).
Only five counties in the Republic of Ireland experienced a YoY increase in new company registrations. Leitrim saw a total of 64 new start-ups, recording the highest percentage growth at +21%, while Laois recorded 141 (+10%), Longford recorded 65 (7%), Cavan recorded 137 (5%) and Mayo recorded 179 (4%).
“The cost-of-living crisis was evidenced in the first half of this year,” said Christine Cullen, managing director of CRIFVision-net.
“The impact of war in Ukraine, how that has impacted higher energy bills and combined with cost-of-living increases, influenced by the post-pandemic supply chain problems, is firmly translating into the business marketplace.
“The year started off strongly with a rise in the number of new company start-ups in January, but that dipped in February and took a big tumble in March, which may also be due in part to that uncertainty created by the war in Ukraine starting at that period.”
Cullen said that March saw the most dramatic decline when compared with the same month last year in what then continued as a steady period of contraction for the remainder of the period.
“Decreases in bellwether industries for the Irish economy like real estate, agriculture, manufacturing and construction suggest that this period of exacerbated cost increases will likely remain through the rest of the year and beyond into next year.”
“Some bright sparks in the data are seen in the growth picture outside of the main urban centres of Dublin, Cork, Galway and Limerick. Although these four cities accounted for the highest numbers of start-ups in H1 this year, figures were still down on H1 of last year. But growth was steady in Leitrim, Laois, Longford, Cavan and Mayo, suggesting an attraction for rural locations where costs may be more reasonable and housing may be more affordable.
“In spite of the 20% decrease in start-ups during the same period last year, there was nonetheless a considerable number of companies still created each month suggesting there are many businesses and entrepreneurs willing to invest in new ventures even though there is a challenging economic backdrop,” said Cullen.