Number of start-ups down 20%

THE number of newly formed companies plunged by 20% during the first three months of the year.

This news follows a jump in the number of liquidations of Irish companies in the final quarter of last year from 69 to 80.

The decline in start-ups is mainly due to downturn in the real estate and construction sectors, which fell by 36% and 48% respectively, according to the latest Bank of Ireland (BOI) business start-up barometer.

It found 4,109 limited companies were formed in the first quarter of this year, compared with 5,276 in the same period last year.

The number is also down from the 4,500 businesses established in the same period in 2006.

The barometer also found that there has been a move away from traditional sectors of the economy towards service based businesses.

The number of accounting, bookkeeping and auditing businesses increased by 10% to 56, while 47 new businesses relating to human health activities were established in the quarter.

Group chief economist at BOI, Dr Dan McLaughlin, said the findings suggests that resources are beginning to shift from construction to other areas of economic activity.

Cork and Dublin were hard hit in the first quarter of this year.

Dublin is down six percent with 1,690 new businesses established compared with 1,805 last year while Cork start-ups dropped from 439 last year to 358 this year.

The number of businesses established in Louth however increased by 17% to 70 compared with the first quarter of 2007, while Wicklow businesses increased by 5% to 67 and County Clare grew by 11% to 62.

The findings, according to BOI, indicate that the recent economic climate has posed significant challenges to Irish start-up businesses in the first quarter of 2008.

Head of small business with BOI Business Banking, Damian Young, said: “Today’s figures confirm the expectation of a slowdown in the number of new companies registered. However, sentiment among existing businesses remains mostly positive.”

“Success for businesses will hinge on their ability to remain customer focused. Tougher economic conditions will focus new businesses on being innovative, competitive and more cost conscious.”