Two businesses a day going bust because of rising costs, SFA director warns

Small Firms Association director tells delegates that small businesses accounted for 85 per cent of all shutdowns last year

Two businesses a day in the Republic went bust last year as firms struggled to cope with rising costs, the National Economic Dialogue (NED) conference was told on Monday.

David Broderick of the Small Firms Association (SFA) said small businesses accounted for 85 per cent of “all shutdowns”.

“These figures won’t plateau or decline any time soon, not with the combined impact of various policy priorities that will drive up the cost of doing business by 36 per cent by 2026,” he said.

Mr Broderick said one could also infer from the 11,700 companies that did not engage with Revenue to repay their warehoused debt “that they too might be gone from our streets and our local business ecosystem”.

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He said while there would always be a level of business attrition there was an important difference between natural failure and “business budgets being the main reason for closures”.

Small and medium-sized businesses have seen costs mushroom in recent years as workers seek higher wages to compensate for higher living costs, on the back of higher energy costs and with the removal of the lower rate of VAT.

This has been particularly onerous on the labour-intensive hospitality sector, where there has been a string of restaurant closures.

Corporate insolvencies rose 41 per cent to 223 in the first quarter compared with the same period last year, according to recent figures from PwC Ireland.

The NED event, which took place in Dublin Castle, also heard that Ireland faced a “housing trilemma” in trying to build enough homes at affordable prices and in an environmentally sustainable way.

Reporting back from the event’s breakout session on housing, UCD academic Michelle Norris noted that one dominant theme emerged from the discussions, namely “how can we deliver enough housing that is sustainable in social and environment terms but also viable in economic terms and affordable for all sections of the population”.

The session on housing, chaired by Minister for Housing Darragh O’Brien, involved several contributions from industry groups which praised the introduction of measures to increase output such as the recent development levy waiver but also others that questioned the long-term impact of the Help to Buy tax rebate and First Home initiative (which critics claim only bolster prices in the long term), she said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times