The number of insolvencies in 2024 was 16% higher than in 2023 but still lower than expected.

According to PwC’s latest Insolvency Barometer there were 852 insolvencies in 2024, compared to 734 insolvencies in 2023.

But it had been predicted there would be over 900 insolvencies by the end of the year.

There was a sharp drop off in insolvencies in the last quarter of the year.

At the end of Q3 2024 insolvency numbers were 34% higher (659) compared to the same period in 2023 (491).

But by Q4 2024 insolvency numbers (193) were 21% lower when compared to Q4 of 2023 (243).

While the overall insolvency rate per 10,000 businesses has doubled since 2021 it still remains well below the 20 year average. 

The annual insolvency rate in 2024 was 29 per 10,000 businesses, more than double the annual rate of 14 per 10,000 recorded in 2021.

But it is still remains below the 20 year average of 50 per 10,000 businesses, and far below the previous peak of 109 per 10,000 businesses recorded in 2012.

To match the 20 year average, the number of insolvencies would need to be closer to 1,500 rather than the 852 recorded in 2024. 

The average lifespan of the 852 companies declaring insolvency in 2024 was 13 years, with the shortest being 10 months and longest being almost 60 years. 

The report also looked at the low number of companies opting to use the Small Companies Administrative Rescue Process.

The number of SCARPs initiated in 2024 was just 30, compared to 33 in 2023.

Approximately only one in every 20 insolvent companies are opting for a rescue process such as SCARP or examinership.

The PWC report notes the low take up of SCARP indicates most insolvent companies have "fundamental profitability issues and are opting for liquidation rather than a rescue process."

The report also showed insolvencies in the UK for October were 24% lower than the same time in 2023.

Meanwhile, the number of receivership appointments in 2024 fell by 13% compared to 2023, with 98 recorded in 2024.

The sector most impacted by insolvencies was retail which accounts for one in four or 200 of the 852 insolvencies.

PWC described the hospitality sector as "one of the most challenged industries".

Hospitality recorded 150 insolvencies for the year or 18% of total 2024 insolvencies, representing 77 per 10,000 businesses, one of the highest of any sector.

Unsurprisingly, Dublin had the highest insolvency rate. The county recorded 440 insolvencies in 2024, including 103 insolvencies in retail, 71 in hospitality and 51 in construction.

The report strikes a positive note when looking forward to next year.

The authors write that "a robust economy, with almost full employment, cautious but steady consumer sentiment and strong fiscal returns could mean a continuation of this reversal of insolvencies towards a positive direction."

However, they warn "macro-economic and geopolitical headwinds hitting our small open economy", mean the future remains uncertain. 

Businesses will, say PwC, also need to deal with a higher cost base in 2025 stemming from an increased minimum wage, energy costs, continued but lower inflation and auto-enrolment. 

Ken Tyrrell,  Business Recovery Partner, PwC Ireland, said: “It is good news for the economy and for businesses that the previous upward trend on insolvencies has reversed.

"The lower than expected insolvencies in Q4 of 2024 may be due to an economy that is performing well, easing inflation, cautious but steady consumer sentiment, a positive sentiment following Budget 2025 and strong fiscal receipts. 

"But nothing is certain, as businesses will need to deal with a higher cost base in 2025 alongside Ireland’s economic outlook being partially clouded by potential international macro-economic and geo-political headwinds.

"Businesses need to focus on their core operations, engage with their people, embed AI and GenAI and manage working capital to ensure they are sustainable into the future

“The Irish economy and many Irish businesses continue to demonstrate resilience.

"We will be closely monitoring the insolvency levels during Q1 of 2025 to see if this change of direction continues or whether the trend of steadily increasing insolvencies since 2021 will continue in the early part of 2025. 

"Typically at this time of year, there is a natural seasonal increase in insolvency levels during Q1 as business owners assess their trading from the previous year, build forecasts for the year ahead and make fundamental decisions based on their outlook for the coming year.”