PwC’s Barometer reveals that there was €1.8bn of debt owing from businesses that failed in 2022 with 99 per cent of insolvencies being SMEs, leaving debts of approximately €2m on average.
Continued elevated rates of business failures are expected in 2023 in the job intensive hospitality and arts, entertainment and recreation sectors. Similar to trends in the UK last year, an increase in business failure rates within the construction and real estate sectors is also expected.
Ireland liquidation rate still remains behind the UK but the gap is closing.
Dublin, Cork, and Galway comprised nearly two-thirds of all the insolvencies in 2022 with Dublin reporting the highest number of failures per 10,000 businesses for the second year running.
Ken Tyrrell, PwC Ireland Business Recovery Partner, said, ‘On average, just over one company is currently failing every day in Ireland. By comparison, in the years following the global financial crisis, over five companies a day were failing. This illustrates the low business failure rate at present but also the potential for business failures to increase if economic conditions worsen in 2023. With economic headwinds remaining driven by high inflation, energy costs and interest rates, in our view, there will continue to be significant pressure on the profitability and cash flow of many businesses through the early part of 2023 at least. The focus should be on performance improvement and cost reduction with a view to cash generation and preservation.’