NEW company formations fell by 20 percent in the first half of the year as increasing overhead costs and economic uncertainty dampened the enthusiasm of start-up founders, according to new CRIFVision-net data.
etail took the biggest hit of all sectors, with 1,084 fewer new businesses being established in the first six months of this year compared to the same period in 2021 – a 51 percent drop.
January was the only month that showed an increase compared to the previous year. It all went downhill from there, as each of the next five months produced successive periods of contraction, according to CRIFVision-net.
An increase in the number of discontinued companies by 56 percent was also recorded.
The slowdown in startups is accompanied by rising input costs for businesses, which have begun to disrupt production in many sectors, most recently in construction.
March saw the most dramatic drop in new business formations, as Russia’s invasion of Ukraine sent energy prices soaring and exacerbated post-pandemic supply chain problems, both of which led to the highest inflation in four decades.
“Increased procurement costs caused by the cost of living crisis have visibly translated into volatility and uncertainty in the market,” said CRIFVision-net CEO Christine Cullen.
“Shrinkage in key industries for the Irish economy such as property, agriculture, manufacturing and construction suggests that this period of increased cost increases is likely to remain until the end of the year and well into next year.”
Startup growth declined in every sector but three, with only social and personal services posting a small 3 percent increase in new business.
The motor, manufacturing and IT sectors all experienced double-digit declines in initial activity, according to the data, although real estate and hospitality saw minimal declines of just 4 and 6 percent, respectively.
Individual regions also did well, with Leitrim, Laois, Longford, Cavan and Mayo recording increasing numbers.
“Some bright sparks in the data are seen in the picture of growth outside major urban centers … suggesting an appeal to rural locations where costs can be more reasonable and housing more affordable,” Ms Cullen said.