Ireland had the lowest bankruptcy rate in the EU during Covid

Businesses in Ireland were less likely to go bankrupt in the first year of the Covid-19 pandemic than any other EU country, a new report says.

However, new figures released by the European Commission also show that Irish entrepreneurs were more hesitant than most European peers to start a new business in 2020.

Preliminary figures show that the ‘corporate dead’ rate in Ireland was just 1.6 per cent of all firms in 2020 – the latest year for which comparative data is available.

It relates to 4,510 companies in the state that registered as going out of business this year. The business death rate represents the proportion of all active businesses that go out of business in a calendar year.

The figures exclude companies involved in mergers, acquisitions, dissolutions or restructurings.

Ireland’s business death rate was exactly half that of the country with the second lowest business death rate – Belgium at 3.2 percent.

More than 1 in 5 companies in Lithuania collapsed in 2020, and more than 1 in 10 went out of business in Bulgaria, Portugal, Denmark and Latvia.

The low rate of business defaults in the immediate post-Covid era was due in large part to wage supports, tax camps and other government-funded programs, and payment freezes from banks and other lenders. The phasing out of this aid is expected to trigger a wave of bankruptcies, although this has not happened yet.

A spokesman for the European Commission said the pandemic has disrupted the business environment “enormously”, including the temporary closure of some businesses, which has left many reluctant to start new businesses as existing ones struggled to stay afloat.

The spokesman said temporary government support programs introduced to offset the impact of the crisis “might explain the resilience of the business death rate in 2020”.

However, the start-up rate here indicates a comparatively low start-up rate compared to other EU countries and a reluctance to start new companies during the pandemic. Ireland had the lowest bankruptcy rate in the EU during Covid

Fry Electronics Team

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