Significant increase in insolvencies in challenging H1, however modest increase in new start-ups is reason for optimism, new CRIFVision-Net data indicates.
The first six months of 2023 saw a 48% year-on-year increase in insolvencies, with 410 insolvencies recorded in H1 2023, versus 277 for the same period in 2022, according to the latest figures from credit risk analyst CRIFVision-Net.
Despite the relative health of the Irish economy, the first half of 2023 has been a period characterised by continued global macro uncertainty and inflationary pressures.
“Despite these macro-economic pressures, the Irish economy has on balance, proven more resilient than some of our neighbours”
The period saw significant insolvency growth in key sectors including hospitality (+214%), construction (+148%) and financial services (+37%).
At a county-level, Dublin (+35%) and Cork (+65%) both recorded double-digit growth in insolvencies, meanwhile other major urban populations Limerick (-43%) and Galway (-19%) performed more positively, recording significant decreases in insolvencies.
Re-starting the start-up engine
Overall, there was a seven per cent increase in company startups, with a total of 20 counties recording year-on-year increases. Key economic centres Dublin (+7%), Cork (+5%) and Galway (+8%) all recorded modest YoY growth. Limerick (-6%) was the only large urban population to record a decrease in new startups.
Economic bellweather sectors such as hospitality (+12%), real estate (+10%), IT (+9%), financial services (6%) and construction (+6%) all recorded growth, however, from a relatively low 2022 baseline. Meanwhile another key industry, manufacturing, saw a nine per cent decrease in new start-ups.
May was the busiest month for new company start-ups (2,527), meanwhile February proved quietest (1,723).
Grappling with uncertainty
“Evaluating the first six months of 2023 is a far from straightforward exercise,” said Christine Cullen, managing director of CRIFVision-net.
“At a global level, we continue to grapple with economic uncertainty, high interest rates, and a rising cost of living. Despite these macro-economic pressures, the Irish economy has on balance, proven more resilient than some of our neighbours.
“Corporate tax receipts are up and the Irish Government finds itself in the novel position of trying to decide how to allocate an €8bn budget surplus. That said, the continued rise in insolvencies is a reminder that these headline numbers don’t tell the full story.
“As we turn our attention to the second half of the year, we hope to see a more business sentiment amongst Irish consumers and SMEs, and that this sentiment will materialise as a confidence, growth orientated mindset going into 2024.”
