Dramatic increase in insolvencies predicted by PwC

Current business failure rate at ‘artificial and record low’, business advisory group says

Ireland is facing a dramatic increase in insolvencies and business restructuring, according to top business advisory group PwC. The warning comes even as new data shows that insolvencies have jumped by almost a fifth in the past year. However, they are still well below "normal" numbers.

"The current business failure rate remains at an artificial and record low," says Ken Tyrrell, PwC Ireland business recovery partner, "largely due to the Government pandemic supports [such as the employee wage subsidy scheme] still in place as well as creditor forbearance".

The Revenue Commissioners have allowed companies to “warehouse” or defer tax payments during the Covid pandemic. Many landlords have also made arrangements with commercial tenants during the past two years.

Figures from Revenue last week showed that 12,000 Irish business have not paid off a penny from €300 million in tax bills that have built up over the pandemic period. These bills are currently deferred, or “warehoused” at zero interest. However, interest will start accruing from the end of this year.


A report published by PwC earlier this year estimated more than 4,500 businesses were saved from going bust primarily as a result of Government’s Covid supports, with a number of these businesses essentially being put on “life-support”.

“We expect a restructuring wave to hit Ireland with an increased level of insolvencies in the later part of this year and 2023,” Mr Tyrrell said.

Record low

He noted that the UK, which phased out business supports earlier than Ireland, currently has triple the annual number of liquidations per 10,000 companies compared with Ireland.

The Irish business failure rate for the last 12 months is 15 companies per 10,000, Mr Tyrrell said. “This remains at a record low, at levels not seen since 2005 and 2006.” The average over the past 17 years is 52 business failures per 10,000 companies and the figure jumped as high as 109 in 2012 in the fallout from the financial crisis.

Over the past year, the sectors hardest hit by insolvency have been the arts, entertainment and recreation, PwC reports in its Restructuring Update, with 81 insolvencies per 10,000 businesses. However, the property sector saw a significant increase in business failure in the first quarter of 2022.

The retail and hospitality sectors are performing better than expected, PwC said, with just three failures per 10,000 over the past year though it warned that these job intensive sectors "will face challenges as the Employment Wage Subsidy Scheme tapers in April".

Geographically, Dublin and Kilkenny have the highest annual rates of business failures across the State, while nine counties reported no cases.

Dominic Coyle

Dominic Coyle

Dominic Coyle is Deputy Business Editor of The Irish Times