Irish Start-Ups Hit Six-year Low, as New Annual Figures Reveal Impact of Inflation and Cost-of-living Crisis on Irish Economy

Ireland’s new company start-up levels reached their lowest point in six years in 2022 due to economic uncertainty brought by rising inflation and a cost-of-living crisis, according to the latest figures from credit analyst CRIFVision-net.

The annual figures released today reveal that a total of 21,637 new start-ups were registered in 2022, the lowest figure on record since 2016 (21,018). The 2022 figure also marks an overall decrease of 16% in new registrations when compared to 2021.

According to the data, the first half of the year recorded the highest number of new company start-ups (11,167, January – June). July was the worst month for new registrations (1,573) in 2022, while May was the best month for start-ups (1,978).

Despite the overall decrease in activity among the start-up community in 2022, there were some signs of regrowth, with two consecutive months of increase recorded in November and December.

Insolvency figures for 2022 were up 17% YoY and a total of 105 start-ups entered bankruptcy in 2022, a 47% YoY increase. While the number of start-ups entering examinership was down 7% and those entering receivership also dropped by 9%.

Female directorships accounted for 18.06% of start-ups in 2022, a 0.79% increase YoY. While male directorships of start-ups in Ireland saw a 0.78% increase, up to 41.06% compared to 40.28% a 2021.

Manufacturing (-6%) and leasing (-14%), traditionally strong performing sectors for the Irish economy, both dipped in 2022.

Regional Overview 2022 vs 2021

Of the 26 counties in the Republic of Ireland, a total of 23 recorded a decrease in new company start-ups for 2022.

—  Sligo experienced the largest percentage decrease, recording a total of 161 new companies in 2022, down 23% when compared to 2021.

—  Sligo was followed by Louth (-22%), Dublin (-20%) and Donegal (-16%).

—  Leitrim (+23%, 122), Mayo (+8%, 357) and Laois (+6%, 271) were the only counties to record a percentage increase.

Dublin homed the highest number of start-ups in Ireland with 9,433, with Dublin 10 recording the highest YoY percentage increase (+125%) in the capital followed by Dublin 7 (+96%), Dublin 8 (+59), Dublin 5 (46%) and Dublin 17 (41%).

Sectoral Overview 2022 vs 2021

In 2022 the majority of industries experienced a similar decline in start-up activity:

—  The wholesale and retail trade sector (-43%, 2,096) recorded the biggest drop in new company start-ups in 2022.

—  Wholesale and retail trade sector was followed by manufacturing (-30%, 561), fishing (-27%, 24) and computers (-24%, 1,117).

—  Only five industries recorded an increase in new company start-ups.

—  Extra-territorial organisations and bodies experienced the largest percentage increase (+50%), followed by agriculture (+14%), hotels and restaurants (+6%) and electricity, water and gas supply (+5%).

Insolvencies: 20222 vs 2021

The overall insolvency rate for 2022 was up 17% compared YoY to 2021, totalling 592 insolvencies for the year.

Within this period, the largest number of insolvencies were recorded in the month of December, with a total of 101, an increase of 57 compared to December of 2021. February was the least insolvent month with a total of 23 insolvencies.

Commenting on the 2022 figure, Christine Cullen, Managing Director of CRIFVision-net said:

“Start-ups faced a different economic environment in 2022. A combination of inflation, high-interest rates, geopolitical uncertainties and energy insecurity led to an uncertain economic environment.

“According to our latest figures, 2022 was the lowest point for the number of new start-up companies in Ireland since 2016, with a noticeable decline in year-on-year activity compared to 2021.

“Decreases in traditionally strong performing sectors for the Irish economy like manufacturing and leasing suggest that this period of cost increases will likely remain a challenge for some time.

“A bright spark, however, is that in spite of a 16% decrease in start-ups in 2022, there was a consecutive increase month-to-month in the final two months of the year suggesting there are many businesses and entrepreneurs willing to invest in new ventures.

“This, coupled with recent Government budget surpluses and a net growth in exports, suggests an understated resilience in the Irish economy in 2023.”