Companies in Ireland – in the European Union – are proving resilient with insolvencies falling in the first quarter of the year, continuing a downward trend from last year, according to the latest research by PwC. There were 192 insolvencies in the first quarter, 14pc fewer than in the same period last year. This was also down 7pc on the last quarter of 2024 when there were 207.
There were 852 insolvencies in total last year, well below the predictions of up to 1,000 made when Revenue closed the Covid debt warehouse last spring. The rate was almost identical to the pre-pandemic figure of 850 in 2019.
The Government had downplayed fears about a record number of companies going to the wall post-pandemic, when many were kept alive by state hand-outs. There was no “tsunami” of insolvencies after Covid, a senior official in the Department of Enterprise pointed out last May.
PwC is calculating the current annual insolvency rate as 29 per 10,000 businesses, well below the long-term average of 50. It says this ratio provides a more accurate picture than absolute numbers, due to the increase in the number of Irish businesses in recent years.
The current number of registered companies is 298,101, compared to about 160,000 near the height of the ‘Celtic Tiger’ (a nickname for Ireland during its boom years with great economic recovery and prosperity from the mid-90s).
Insolvencies were 25 in the retail sector in the first quarter, 40pc down on the same period in 2024. Among them was the Irish arm of New Look, which went into liquidation in February. They employed 347 people at 26 outlets nationwide. Hospitality had 43 insolvencies, which was in line with the rates recorded last year, when there were 154 insolvencies in total.
“This consistency suggests the sector is maintaining its current stability despite ongoing economic challenges,” PwC said. “Our analysis also shows that most of the insolvencies are predominantly small restaurants and cafes.”
It pointed out that high-profile closures of restaurants and pubs recorded by the media do not necessarily equate to insolvencies. Some of these businesses are sole traders and do not operate as companies, while others are still in the process of closing down and have not completed the process.
The sector is pleased that the government departments and companies are instructing staff to return to offices either full time or more days. Department of Social Protection informed staff they would be required to work from the office a minimum of two days, with senior staff due in for three days at least. Staff in the Department of Finance have also been instructed to work onsite more often, according to the trade union Forsa.
“Restaurants will certainly welcome this,” said Adrian Cummins, chief executive of the Restaurants Association. “We would love to see it go to full time, but this is definitely a start.”
The number of rescue processes in the first quarter of 2025 was consistent with rates last year. There was one examinership and eight uses of the Small Company Administrative Rescue Process (Scarp), a rate that is regarded as an under-utilisation of the scheme which the Government set up during covid as a way of assisting firms in temporary difficulties with creditors.
Business recovery partner with PwC Ireland, Ken Tyrrell, said: “The continued year-on-year decline in insolvencies demonstrates the robustness and resilience of our economy. However, with the prevailing economic uncertainties and geopolitical risks looming, it remains to be seen what the year has in store.
He added: “Nothing is certain and businesses will also need to deal with a higher cost base in 2025 driven by domestic and international factors. I would advise businesses to focus on their core strategies, cost base and actively manage their working capital to ensure that they are financially sustainable into the future.”
The writer is our foreign correspondent based in the UK
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