Potential 'tsunami' of businesses going bankrupt once subsidies end, warns economist

Dan O'Brien said there is concern that Government subsidies have created a "backlog" of employers that are doomed when those subsidies end.

Economist Dan O'Brien says the number of firms winding up has fallen worldwide during the pandemic, something which has been described as "extraordinary". Picture: Gareth Chaney/Collins

An economist has warned of a potential "tsunami" of businesses going bankrupt over the coming months.

Dan O'Brien says the number of firms winding up has fallen worldwide during the pandemic, something which has been described as "extraordinary".

The reasons for this include Government supports and companies who would have gone bust without the lockdowns surviving temporarily.

Mr O'Brien expressed concern that these subsidies have created a "backlog" of employers that are doomed when those subsidies end.

"We are going to get a backlog of bankruptcies among businesses that would have gone out of business over the last 18 months anyway," he said.

"Plus, companies in the sectors worst affected by Covid are going to be hit once subsidies are taken away."

Mr O'Brien said the main worry of this surge of companies closing is the impact it will have on the economy and unemployment figures.