Issue 412 (Week ending 18/08/2020)

Ireland's company start-up levels reached the lowest point in five years in the first half of 2020, a total of 9,853 company start-ups were recorded amid the coronavirus pandemic, the lowest number on record since H1 2015 (8,981).

Regional insights: H1 2020 vs H1 2019

The impact of the Covid-19 pandemic on the start-up community is evident across the entire country. Of the 26 counties, 25 experienced a year-on-year decline in company start-up numbers.

• Westmeath recorded the largest percentage decrease: 99 start-ups were registered in the first half of 2020, a decline of 38%.
• Westmeath was followed by Louth (-36%, 218), Sligo (-35%, 57), Waterford (-33%, 140), and Cavan (-33%, 107).
• Tipperary was the only county in the Republic to record a year-on-year increase in start-up figures, with a total of 256 start-ups established between January and June 2020, an increase of 4%.

Sector overview: H1 2020 vs H1 2019

Over the last six months, the majority of industries have experienced a similar decline in activity.

• The fishing sector (-60%, 12 total start-ups) experienced the biggest drop in start-up numbers.
• Fishing was followed by the community, social and personal (-36%, 1,080), real estate (-32%, 241) and leasing (-32%, 219) sectors.

Insolvencies

The overall insolvency rate for H1 2020 was down 27% compared to the same period in 2019, totalling 240 insolvencies for the period of January to June. The decline in insolvencies for H1 2020 can be widely attributed to the closure of courts during the Covid-19 pandemic and the current Government stimuli. Within this period, the largest numbers of insolvencies were recorded in the month of February, with a total of 72 insolvencies; this was an increase of 60% compared to February 2019.

• The most insolvent sector was wholesale, retail, and trade with a total of 42 insolvencies; this was down 24% on the same period last year.
• Wholesale was followed by the construction (31, - 34%), legal, accounting, and business (30, -49%), and hospitality (27, -30%) sectors.
• Financial intermediation (25) and community, social and personal activities (22) were also among the most insolvent industries during the first half of 2020.

A significant rise in insolvency figures is projected for the latter half of the year with courts beginning to resume and operate in a post-lock down environment.

Insight

Commenting on the figures, Christine Cullen, Managing Director of CRIF Vision-net, said:

"Our figures clearly show how the Covid-19 pandemic has taken its toll on company formation and the broader Irish economy. In January, Ireland looked to be in extremely good economic health: for the first time ever, company start-up registrations exceeded 2,200 in a single month, which suggested some positive trends for the year ahead. However, Covid-19 led to an early dip in this figure, with levels starting to drop off as early as February. The full brunt of the pandemic was particularly evident in the month of April when numbers dropped to the lowest in eight years.

Thankfully, new company start-up figures for June may suggest the beginnings of a recovery. We must now build on this. The Government's July Stimulus Package is a vital step in the right direction, demonstrating strong commitment to rebuilding the economy at all levels. Supports including the extension of the Restart Grant for Enterprises and the Future Growth Loan Scheme will most certainly be welcomed by those in the business community and will play a massive role in the recovery of the sector going forward.

To this end, it is vital that industry and Government continue to work together to ensure that the necessary supports remain available to businesses in this challenging period."