The number of company formations fell to its lowest level for six years in 2022 as entrepreneurs were put off the idea of setting up new companies by rising inflation, geopolitical uncertainty and energy insecurity, according to credit analyst CRIFVision-net.

A total of 21,640 new companies were registered in 2022, the lowest figure since 2016 and a decline of 16% compared to 2021.

Formation activity was stronger during the first half of the year, with 11,170 companies registered between January and June. May was the best month for formations (1,980) while July was the slowest month for new registrations (1,570).

Conversely, insolvencies were up 17% year-on-year to 592, and a total of 105 companies entered bankruptcy in 2022, a 47% annual increase. The number of companies entering examinership (-7%) and receivership (-9%) were both down from 2021.

“Decreases in traditionally strong performing sectors for the Irish economy like manufacturing and leasing suggest that this period of cost increases will likely remain a challenge for some time," said Christine Cullen, managing director of CRIFVision-net.

In Association with

“A bright spark, however, is that in spite of a 16% decrease in formations in 2022, there was a consecutive increase month-to-month in the final two months of the year suggesting there are many businesses and entrepreneurs willing to invest in new ventures." 

The wholesale and retail trade sector (-43%) recorded the biggest drop in new company formations in 2022, followed by manufacturing (-30%) and computers (-24%). 

Of the 26 counties in the Republic of Ireland, 23 recorded a decrease in new company formations for 2022, with Sligo (-23% to 161) experiencing the largest decline.

Entrepreneurial activity by migrants is evidenced by company formation growth in Dublin 10 (+125% year-on-year), Dublin 7 (+96%), Dublin 8 (+59), Dublin 5 (46%) and Dublin 17 (41%).  

(Pic: Getty Images)