Half of Irish businesses on verge of collapse, new survey shows
HALF of all Irish businesses are on the verge of collapse, according to stress tests carried out by business and credit risk company Vision-net.
Companies in the hospitality, construction, IT, motor, and wholesale and retail sectors are least likely to survive, Vision-net said. The shocking picture of the economy's fragility comes as five companies went bust every day this month.
"Half of the businesses stress-tested across the economy showed signs that they were on the brink of failure," Vision-net managing director Christine Cullen said, following a stress test of 9,428 Irish companies, which found 49pc were at high risk of failure.
"The trading conditions remain very challenging for companies, with many of them, particularly those in the hospitality and construction sectors, struggling to stay afloat," she added.
"High levels of unpaid debt and cash flow problems are hampering the capacity of companies to stay in business and this has a knock-on impact on jobs and growth."
Despite the stabilisation in the economy, companies continue to run into problems at almost the same rate as they did during the worst days of the financial crisis.
Celtic Helicopters, which is controlled by former Taoiseach Charlie Haughey's son Ciaran, said last week that it would hold a creditors' meeting next week in Dublin after 27 years in operation. Vision-net said 131 companies were declared insolvent in the first four weeks of July -- down 15pc on the same month last year. Of those, 97 were liquidated, 33 entered receivership, and an examiner was appointed to one company.
The Revenue Commissioners accounted for 19 of the 104 commercial judgments recorded in the courts this month, followed by professional services businesses and local authorities. Overall, the average value of a judgment was €79,610 -- up 76pc on last July.
While companies are failing every day, business people are also busy forming new companies, with 2,750 company and business start-ups recorded in July alone. Professional services accounted for almost one-quarter of these new businesses -- but the same sector recorded an equal number of business failures. Vision-net's figures, which show problems in the motor and retail industry, come just days after the Central Statistics Office reported that the slide in retail sales accelerated sharply in June as motor sales continued to plunge.
The volume of retail sales contracted by 5.5pc in June, compared with the same month a year earlier -- the biggest annual fall since December 2009.
Core retail sales volumes, which exclude motors, fell 1.7pc in June as sales of food, drinks and tobacco fell almost 10pc month-on-month. Sales of hardware, paints and glass were also under pressure in June, falling almost 5pc month-on-month, the CSO added -- reflecting the problems in the construction sector also highlighted by Vision-net.
Alan McQuaid, an economist at Merrion Stockbrokers, said last week that consumers were unlikely to begin spending anytime soon.
"Consumers remain under immense pressure, with stealth taxes announced in the December Budget further set to eat into disposable income," he added.