Ireland’s economy in strong health: 62 new companies formed every day in 2018, insolvencies drop 26% on 2017
Boom, bust and strong recovery of construction sector particularly evident in new CRIF Vision-net figures, which compare company start-ups in 2006, 2012 and 2018.
New figures from business and credit risk analyst CRIF Vision-net show that Ireland has a strong bill of health.
An average of almost 62 new companies were formed every day in 2018, while insolvencies dropped by 26% compared to 2017.
Company start-ups: 2018 vs 2017
2018 was a record-breaking year for new company start-ups in Ireland, up on a previously record-breaking 2017: 22,493 new companies were formed in 2018, up 0.5% on the previous year (22,380).
Professional services accounted for the bulk of new start-ups in 2018 (4,575, or 20% of total new start-ups, up 4% on 2017), followed by finance (3,326, 15% of total, down 4%) and social and personal services (2,726, 12% of total, up 17%).
Dublin was the centre of new company start-ups in 2018. 10,313 new companies were established in the capital last year, nearly half (46%) of all new companies in Ireland, up 1% on the previous year. Cork followed (2,260 new companies, 10% of total, up 0.3%), with Galway in third (897 new companies, 4% of total, down 6% on the previous year).
Construction: a closer look
Viewed in three distinct phases over the last twelve years—the boom, the recession and the recovery—CRIF Vision-net’s construction industry data allow for interesting comparisons.
2,356 new construction company start-ups were established in 2018, accounting for 10% of total new start-ups; this figure is up 6% on 2017.
While the figure is undoubtedly high, new construction start-ups have still not come close to 2006 numbers during the height of the boom: 3,360 new construction companies were established in 2006 compared to 2,356 in 2018, a 30% decrease.
The subsequent catastrophic drop-off during the recession is easily visible: just 883 construction start-ups were established in 2012, a decrease of 74% on 2006. However, the economic recovery of the following six years is equally evident—the 2018 construction start-up figure is a 167% increase on 2012.
Insolvencies: 2018 vs 2017
There were 756 company insolvencies in 2018, a decrease of 26% on 1,018 in 2017. There was a downward trend in insolvencies in nearly every sector and county.
Professional services was the most insolvent sector in 2018 (128, 17% of total insolvencies, down 41% on 2017), followed by construction (122, 16% of total, down 11%) and wholesale and retail (119, 16% of total, down 6%).
Dublin was the most insolvent county (316, 42% of total insolvencies, down 28%), followed by Cork (71, 9% of total, down 21%) and Meath (47, 6% of total, up 68%). Longford, Cavan, Roscommon and Leitrim all recorded fewer than five insolvencies in 2018.
Commenting on the 2018 figures, Christine Cullen, Managing Director of CRIF Vision-net, said:
“2018 was the second consecutive record-breaking year for new company start-ups. Despite geopolitical uncertainty, economic activity has increased, albeit at a slower rate, and remained diversified across multiple sectors. The Government has continued to pursue pro-enterprise policies to the country’s overall benefit.
“2019 is likely to be a critical year, however, for multiple reasons. First, Ireland’s economy is in a mature phase. While it is evidently robust, we are unlikely to be able to sustain the fast growth that defined the last six years, particularly as we edge towards full employment. It will be harder for companies to find the necessary talent to fill job vacancies, a challenge that has the potential to limit the speed at which these companies can grow and scale, which in turn will limit economic growth.
“Of course, the great gamble of 2019 is Brexit. We simply don’t know to what extent it will affect the Irish economy in its totality, though it is already clear that some sectors, particularly those that depend on Britain, such as agri-food and tourism, will be impacted by sterling fluctuations and the border issue.
“As a no-deal scenario looks increasingly likely, the onus is on Irish companies to prepare for disruption to the greatest extent possible, and for the Irish Government to ensure that businesses understand what can be done to mitigate risk, what can be provided in assistance, and the measures it intends to implement to safeguard the economy from the worst effects of a hard Brexit.”
An international perspective
CRIF Vision-Net’s parent company, CRIF has operations in 30 different countries around the world. This week it published second half of the year data for its German operations. Like Ireland, professional services represented the highest rate of start-ups in Germany and accounted for almost one in four new companies (compared to Ireland’s one in five). This was followed up wholesale and retail, which accounted for 21% of new German start-ups, compared to just 8.4% in Ireland.
In Germany, the highest rates of insolvencies were seen in construction which accounted for 20% of all second half of 2018 insolvencies. This is 6% higher than the figure for the same period in Ireland, where 14% of insolvencies affected the construction sector.
While there were numerous parallels between the insolvency rates in the two countries, Real Estate was the sector that saw the most marked difference between the Germany and Ireland. Real estate accounted for 8.5% of insolvencies in Ireland in the second half of 2018, versus only 2.6% in Germany.
Commenting on the quarterly data, CRIF Regional Director for the UK and Ireland, Sara Costantini, said:
“We are pleased to see another year of record-breaking growth in Irish company start-ups and in particular across the professional services, finance and social and personal services sectors, despite 2018’s Brexit uncertainty.
“Our international footprint allows us to leverage a global database of intelligence for our clients, comparing country data to identify industry patterns and trends. The findings in Ireland compare favourably to the German data we published earlier this week, an indication that Ireland is performing in line with its larger counterparts in continental Europe.”