- by Megan Gilmer on 28/05/2024
In Quarter 1 of 2024, we have seen the most company closures when compared with the same period to the 3 years prior; 2023, 2022, and 2021.
Q1 2023 witnessed 2,147 company closures, a 3.9% decrease from the 2,234 closures in Q1 2022, and only slightly higher than the 2021 figure of 2,071 company closures. In 2024 however, company closures in Q1 are up 61.4% on the 2021 figure.
So, what are the potential factors that have caused a spike in company closures this Q1?
- Increases to minimum wage: since 1st January 2024, the national minimum wage in Ireland is 12.70EUR per hour.
- Housing crisis: the ongoing housing crisis can impact business performance, as companies are finding it harder and harder to attract and retain skilled and talented workers, due to the inaccessibility of living in densely-populated areas.
- Industry specific: an area that has seen a particularly high increase in business closures (and, perhaps surprisingly, company start-ups) is restaurants and mobile food services. This is likely compounded by the above points, and low margins.
It should be noted that most companies can be dissolved for reasons other than insolvency and bankruptcy, such as a company reaching the natural end of its life, or it may be a non-surviving entity in a corporate merger.
The cumulative affect of the above factors, and also considering that not all company closures are due to insolvency, could explain the sharp increase in company closures in Q1 2024. If company closures continue at this rate, and outperform company start-ups, it could cost the Irish economy dearly.
In contrast, company start-ups are in fact outperforming company closures, and the spread of new businesses outside of densely populated areas is helping smaller communities and continuing to expand the Irish economy. In Q1 2024, there was a 10% increase in start-ups formed when compared to the same period last year.
In the 2023 Annual Review of Business in Ireland, CRIFVision-net noted that the most vulnerable time for start-ups was year 3 and 4 of their lifecycle. This tracks with the sharp rise in start-ups witnessed in 2021 (25,700 approx.) we are now seeing the first drop off of businesses succumbing to this fact.
Want to stay in the loop about company information and credit risk, KYC, and compliance data in Ireland? CRIFVision-net is one of Ireland's leading providers of these services, and more, so why not speak with our experts today, at solutions.vision-net.ie, or call us on Tel: +353 (01) 903 2660.
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