Irish start-ups hit six-year low, as new annual figures reveal impact of inflation and cost-of-living crisis on Irish economy.
21,637 new companies were started in Ireland in 2022, the lowest number on record since 2016.
According to new data from CRIFVision-net, overall company start-ups were down 16% year-on-year.
“Decreases in traditionally strong performing sectors for the Irish economy like manufacturing and leasing suggest that this period of cost increases will likely remain a challenge for some time”
According to the data, the first half of the year recorded the highest number of new company start-ups (11,167, January – June). July was the worst month for new registrations (1,573) in 2022, while May was the best month for start-ups (1,978).
Signs of regrowth
Despite the overall decrease in activity among the start-up community in 2022, there were some signs of regrowth, with two consecutive months of increase recorded in November and December.
Insolvency figures for 2022 were up 17% YoY and a total of 105 start-ups entered bankruptcy in 2022, a 47% YoY increase. While the number of start-ups entering examinership was down 7% and those entering receivership also dropped by 9%.
Female directorships accounted for 18.06% of start-ups in 2022, a 0.79% increase YoY. While male directorships of start-ups in Ireland saw a 0.78% increase, up to 41.06% compared to 40.28% a 2021.
Manufacturing (-6%) and leasing (-14%), traditionally strong performing sectors for the Irish economy, both dipped in 2022.
The regional picture
Of the 26 counties in the Republic of Ireland, a total of 23 recorded a decrease in new company start-ups for 2022.
Sligo experienced the largest percentage decrease, recording a total of 161 new companies in 2022, down 23% when compared to 2021.
Sligo was followed by Louth (-22%), Dublin (-20%) and Donegal (-16%).
Leitrim (+23%, 122), Mayo (+8%, 357) and Laois (+6%, 271) were the only counties to record a percentage increase.
Dublin homed the highest number of start-ups in Ireland with 9,433, with Dublin 10 recording the highest YoY percentage increase (+125%) in the capital followed by Dublin 7 (+96%), Dublin 8 (+59), Dublin 5 (46%) and Dublin 17 (41%).
Start-ups by sector
In 2022 the majority of industries experienced a similar decline in start-up activity:
The wholesale and retail trade sector (-43%, 2,096) recorded the biggest drop in new company start-ups in 2022.
Wholesale and retail trade sector was followed by manufacturing (-30%, 561), fishing (-27%, 24) and computers (-24%, 1,117).
Only five industries recorded an increase in new company start-ups.
Extra-territorial organisations and bodies experienced the largest percentage increase (+50%), followed by agriculture (+14%), hotels and restaurants (+6%) and electricity, water and gas supply (+5%).
Insolvencies on the rise
The overall insolvency rate for 2022 was up 17% compared YoY to 2021, totalling 592 insolvencies for the year.
Within this period, the largest numbers of insolvencies were recorded in the month of December, with a total of 101, an increase of 57 compared to December of 2021. February was the least insolvent month with a total of 23 insolvencies.
“Start-ups faced a different economic environment in 2022,” said Christine Cullen, managing director of CRIFVision-net.
“A combination of inflation, high interest rates, geopolitical uncertainties and energy insecurity led to an uncertain economic environment.
“According to our latest figures, 2022 was the lowest point for the number of new start-up companies in Ireland since 2016, with a noticeable decline in year-on-year activity compared to 2021.
“Decreases in traditionally strong performing sectors for the Irish economy like manufacturing and leasing suggest that this period of cost increases will likely remain a challenge for some time.
“A bright spark, however, is that in spite of a 16% decrease in start-ups in 2022, there was a consecutive increase month-to-month in the final two months of the year suggesting there are many businesses and entrepreneurs willing to invest in new ventures.
“This, coupled with recent Government budget surpluses and a net growth in exports, suggests an understated resilience in the Irish economy in 2023.”
