PwC: Ireland faces 'wave of business failures'     

The winding down of Covid business supports will likely lead to a rise in insolvencies in Ireland. Picture: iStock

Irish businesses face "a wave" of insolvencies starting this year after a record low level of failures during the Covid-19 crisis, according to PwC.  

Business failure rates were running at 15 per 10,000 firms in the last 12 months  — the lowest for 17 years — but have increased in the first three months this year.

The winding down of Covid business supports will likely lead to a rise in insolvencies in Ireland, as has happened in Britain, according to PwC.             

“Most business owners are very aware that the current economic environment is very fluid, given the war in Ukraine, and businesses are facing some strong headwinds in the form of geopolitical uncertainty, higher energy costs and price inflation, continued supply chain issues as well as upward pressure on interest rates,” said Ken Tyrrell, business recovery partner at PwC Ireland.

Increased pressure

“Our analysis shows that business failures in Ireland, while at current record low levels, have increased over the last 12 months. We expect a restructuring wave to hit Ireland with an increased level of insolvencies in the later part of this year and 2023,” Mr Tyrrell said.

PwC also expects that from a low level that businesses will make more use of the Small Company Administrative Rescue Process, or Scarp, and examinership this year and in 2023. 

“The current business failure rate remains at an artificial and record low," said Mr Tyrrell.

"In our inaugural report, Act Now: From Recovery to Growth published in February 2022, we estimated that over 4,500 businesses were saved from going bust primarily as a result of Government’s Covid supports, with a number of these businesses essentially being put on life-support."  

“Our analysis is based on a per 10,000 companies measure which is a simple and effective statistic for comparison purposes between different periods, industries, towns, counties and countries with different population sizes," he said. 

PwC said Irish insolvencies were "at artificial and record low levels".

"A restructuring wave still to hit Ireland with an increased level of insolvencies in the later part of this year and 2023," it said.