Irish start-ups hit four-year low, as new annual figures reveal impact of Covid-19 pandemic on Irish economy
• CRIFVision-net records total of 21,924 new company start-ups in 2020, the lowest number on record since 2016
• Overall company start-ups down 4% YoY
• Despite the Covid-19 economic downturn, start-ups have remained more resilient when compared to the 2008 recession
• Annual insolvency figures down 10.7% compared to 2019, following prolonged closure of courts
• However, new company registrations recovered in Q4 2020, increasing 23% YoY
Ireland’s new company start-up levels reached their lowest point in four years in 2020 due to the Covid-19 pandemic, according to the latest figures from credit risk analyst CRIF Vision-net.
The annual figures released today reveal that a total of 21,924 new start-ups were registered in 2020, the lowest figure on record since 2016 (21,018). This marks an overall decrease of 4% in new registrations when compared to 2019.
According to the data, the second quarter of the year recorded the lowest number of company start-ups (3,998, April–June). April 2020 was the worst month for start-ups (1,075) since December 2012 (992).
Despite the overall decrease in activity among the start-up community in 2020, there have been early signs of regrowth, with levels increasing from June (1,701).
The final quarter of the year proved particularly strong, marking an increase of 20% in new registrations compared to Q3. In total, 6,583 new companies were registered in Q4, a 23% increase on the same period in 2019.
The figures reveal that despite the Covid-19 economic downturn, start-ups have remained more resilient when compared to the 2008 recession where figures decreased by 22% year-on-year for 2008 (18,696 start-ups, 2007 vs 14,603 start-ups, 2008).
Regional overview: 2020 vs 2019
Of the 26 counties in the Republic of Ireland, a total of 24 recorded a decrease in new company start-ups for 2020:
- Leitrim experienced the largest percentage decrease, recording a total of 55 new companies in 2020, down 41% when compared to 2019.
- Leitrim was followed by Meath (-39%, 629), Clare (-33%, 401), and Cavan (-24%, 213).
- Mayo (+4%, 345) and Tipperary (+6%, 461) were the only two counties to record a percentage increase.
Sectoral overview: 2020 vs 2019
In 2020 the majority of industries experienced a similar decline in start-up activity:
- The fishing sector (-42%, 28) recorded the biggest drop in new company start-ups in 2020.
- Fishing was followed by leasing (-39%, 411), utilities (-17%, 151), and hospitality (-14%, 1,111).
- The legal, accounting, and business sector was the biggest contributor to new company start-ups in 2020, accounting for 4,401 registrations. This, however, marks a 6% decrease for the sector when compared to 2019.
Insolvencies: 2020 vs 2019
The overall insolvency rate for 2020 was down 10.7% compared to 2019, totalling 570 insolvencies for the year. This decrease in insolvencies levels for 2020 can be widely attributed to the prolonged closure of courts during the Covid-19 pandemic.
Within this period, the largest numbers of insolvencies were recorded in the month of February, with a total of 76 insolvencies; this was an increase of 69% compared to February 2019. April proved to be the least insolvent month: a total of 19 insolvencies were recorded, down 55% on 2019.
- The most insolvent sector during the first half of the year was wholesale, retail and trade (90), down 12% on 2019.
- Wholesale was followed by legal, accounting and business (79, - 29%), hotels and restaurants (74, +1%), and construction (62, -15%).
Commenting on the 2020 figures, Christine Cullen, Managing Director of CRIF Vision-net, said:
“Given the unpredictable nature of the Covid-19 pandemic, it is difficult to measure the full economic impact of restrictions and lockdowns.
“However, as we approach almost a full year since the first case of Covid-19 was confirmed in Ireland, there is a lot that we can learn in terms of trends and changes.
“According to our latest figures, 2020 was the lowest point for the number of new start-up companies in Ireland since 2016, with a noticeable decline in activity from the second quarter of the year. The correlation between this decline and the first Covid-19 lockdown is a clear indicator of the immediate impact that the national lockdown had on new business creation.
“From the early stages of the pandemic, the Government was quick to provide support for SMEs and new business start-ups, introducing a range of measures that have been consistently extended and adapted in line with Covid-19 developments.
“While these supports have played a vital role in facilitating early recovery, the concern now is that the return to lockdown restrictions will reverse the progress that has been made so far.
“The impact of prolonged closures and restrictions on businesses has been well documented over the course of the pandemic, and while restrictions are important now, we must ensure that we are simultaneously developing a sustainable environment in which businesses can recover.
“SMEs account for 99% of all businesses in Ireland. They will play a massive role in the overall recovery of the economy. The focus must therefore remain on ensuring there are supports and measures in place to prevent current restrictions undoing the positive recovery seen in new business creation in the final quarter of 2020.”