Restructuring wave still yet to hit
fewer businesses failed in Q1 2022 than Q4 2021.
more businesses failed in Q1 2022 when compared to Q1 2021.
(113,000) of employees who avail of the EWSS work in hospitality.
The UK has three times the annual number of liquidations of Ireland.
While many businesses have survived the COVID-19 pandemic, they are now emerging with challenged balance sheets. Irish businesses are facing a number of challenges. These include the expiry of the Employment Wage Subsidy Scheme (EWSS); high inflation; increasing interest rates; and higher energy costs. As the Government's COVID-19 supports are gradually reduced and debt recovery gathers pace, we expect a greater level of restructuring in the coming quarters and years.
The business failure rate per 10,000 companies decreased by 12% from Q4 2021 (4.2) to Q1 2022 (3.7). However, there was a 19% increase in business failures during Q1 2022 (3.7 per 10,000 companies) when compared to the same period in 2021 (3.1 per 10,000 companies).
During Q1 2022, the real estate sector had the largest quarterly increase in failures per 10,000 companies, rising from 6 to 20.
Dublin recorded the highest annual business failure rate of 24 per 10,000 companies.
In Q4 2021, England and Wales had the highest number of liquidations (over 4,000), since records began in the 1960s. The UK currently has triple the number of liquidations per 10,000 than the equivalent rate in Ireland.
The iTRAXX Crossover index is a reliable and commonly-used measure of volatility in global financial markets.
The index increased as a result of the war in Ukraine at the end of February 2022. The index has been fluctuating at a high level since early 2022 and peaked at 419 in early March.
Companies must reappraise and shore up their liquidity and working capital requirements to address the unwinding of government support and debts accrued during the pandemic, while meeting renewed customer demand and delivering delayed investment.
The limited availability of further government support will increase reliance on existing lenders, shareholders and access to the capital markets, which may be less forthcoming in sectors where the prospects for recovery and long-term growth are less clear.
In this uncertain and potentially stop-start pathway to recovery and economic growth, it's essential to monitor cash flow and develop realistic forecasts which take account of potential varying recovery scenarios and, in particular, increasing rates of inflation in Ireland and around the world.
The immediate demands don't just include day-to-day expenses, but also funding for future growth and adapting to the trends reshaping marketplaces and economies.
The months and years ahead will undoubtedly be challenging for many Irish businesses. We are ready to help you. Contact us today.