New Central Bank research shows a reduction of 36% in the registration of new companies during the first outbreak of Covid-19
The report also finds there was a sharp reduction of 36% in the registration of new companies between March and May of this year.
While there was a rebound over the summer, the number of new companies being established is still below 2019 levels by 10%.
The report noted that registration of companies in the Accommodation and Food sector showed the steepest declines of 50% compared to the same time in 2019.
The rebound in registrations over the summer featured a lot companies in the Retail sector conducting sales by mail order or over the internet.
Early in the pandemic, company directors could not meet creditors safely so the number of insolvencies recorded actually declined in April.
Company law has since been changed to allow for virtual meetings to take place.
Over the period from March to September, the insolvency rates for companies in Accommodation and Food as well as Retail and Recreation picked up but the Central Bank noted they are at pre-pandemic levels “despite the scale of the economic shock”.
The Central Bank warned that the current relatively low insolvency rate “may not last indefinitely given the vulnerable state of many firms”.
It also warned of pressures from a second wave of Covid-19 and the possibility of Brexit without a trade deal.
The experience of companies in Ireland is replicated in other countries, according to today’s report.