Business failures rise following spike in costs and wind-up of State supports, report shows

However, this figure remains low compared to 2019 levels as current the annual failure rate 25 companies per 10,000, compared to the pre-pandemic level of 36 per 10,000.

The arts, entertainment, and recreation sector, as well as the hospitality sector, remain two of the largest sectors with business failures.

Insolvency levels have risen in annual terms following the wind-up of covid-related Government supports and the increasing cost of doing business amid an inflationary environment, a new report showed.

Business failures increased by 33% in the first nine months compared to the same period a year earlier, the latest Insolvency Barometer by professional services firm PwC found.

“In the face of market disruption, geopolitical change, and high-profile challenges across different industries, businesses continue to feel the effects of an uncertain market, with restructuring activity rising and risk of shocks remaining,” said Ken Tyrrell, business recovery partner at PwC Ireland.

The company estimated that the total number of insolvencies will be around 650, compared to 539 in 2022, as the final three months of the year are usually the “busiest period for business failures”.

“We expect the debt warehousing build-up to increase business failure rates as companies attempt to enter negotiations with Revenue ahead of the May 2024 deadline,” said Mr Tyrrell.

The arts, entertainment, and recreation sector, as well as the hospitality sector, remain two of the largest sectors for business failures. The retail sector has seen the most business failures with 116 in the year to date, according to the report.

The report found 352 insolvencies have already occurred this year — this is up 79% on 2021 levels.

However, this figure remains low compared to 2019 levels as the current annual failure rate is 25 companies per 10,000. The pre-pandemic level of insolvency was 36 per 10,000.

A separate report from PwC showed more than 4,500 businesses were saved as a result of Government pandemic supports, with a number of these businesses essentially being put on “life-support”.

At the start of the year, insolvencies rose following artificially low levels during the same period a year earlier due to these supports.

Economist Jim Power said many “zombie businesses” which were not viable were being kept open through these supports, leading to a rise in business closures once they were removed.