Sharp decline in new business creation, but rural areas are bucking the trend

The number of new businesses registered in Ireland fell by 12 per cent in the first three months of this year compared to 2021, although rural counties held up better.

ata collected by CRIFVision-net, a company information specialist, point to inflationary consequences hitting urban hubs.

Start-up growth slowed in manufacturing (-32 percent), automotive (-19 percent), transportation, storage and communications (-15 percent), and health and social care (-10 percent)

The top sectors bucking the trend were utilities (+26%), hospitality (+14%) and construction (+5%).

Also in the predominantly rural counties of Leitrim (+42 per cent), Longford (+35 per cent), Laois (+21 per cent) and Wexford (+13 per cent) there was a significant increase in the number of start-ups, but counties with a large urban population recorded declines.

The figures suggest that economic tailwinds such as supply chain vulnerabilities, inflation and a drop in business and consumer sentiment could hamper the ambitions of budding entrepreneurs.

The record pace of job creation and resulting skills shortages may also have persuaded more people to remain in employment rather than take the risk of becoming self-employed.

Urban centers such as Dublin, Cork, Galway and Limerick, where the labor market is extremely strong, have seen business start-ups fall.

Christine Cullen, chief executive of CRIFVision-net, said uncertainty has shaped the economy since the lifting of Covid restrictions and the start of the war in Ukraine. “A 12 percent drop in business start-ups suggests underlying restraint in the domestic and global economy,” she said.

However, she said there are signs of optimism, including new growth in more rural areas, possibly as a result of the exodus of people from the cities facilitated by remote work, as well as housing shortages and high house prices in urban centres.

“Some of the uncertainty is offset by the recovery in hospitality and construction, two of the industries that have suffered the most from the pandemic’s health restrictions. Some might assume people don’t have the disposable income to spend in our bars, hotels and restaurants, but 14 percent growth in hospitality suggests optimism in the industry.”