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Covid shutters a quarter of all firms and some may not return

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Economy in deep freeze: An empty Grafton Street in Dublin during the Covid-19 lockdown. Photo: Douglas O'Connor

Economy in deep freeze: An empty Grafton Street in Dublin during the Covid-19 lockdown. Photo: Douglas O'Connor

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Economy in deep freeze: An empty Grafton Street in Dublin during the Covid-19 lockdown. Photo: Douglas O'Connor

A quarter of Irish businesses have stopped trading as a result of the pandemic lockdown, according a survey by the Central Statistics Office (CSO).

However, it appears that the vast majority believe they will survive despite taking a hit to their earnings and laying off staff.

With the Government looking at how to ease the harsh lockdown, attention is turning to whether businesses will reopen.

The economy is set for its largest hit since the 1930s and is expected to shrink by more than 10pc this year, with almost a quarter of the workforce set to lose their jobs as two years of economic gains are wiped out.

The CSO survey was published yesterday and 790 companies out of 3,000 who were sent the online questionnaire responded. It was taken in the week of April 20.

It said accommodation and food services, where nine out of 10 of the businesses surveyed said they had shut down, and construction, with a closure rate of over 70pc, were the worst-hit sectors.

"The results show that of the enterprises that responded to the business impact of Covid-19 survey, 23.3pc had ceased trading temporarily during the period March 15 to April 19, 0.6pc had ceased trading permanently, and 76pc continued to trade," CSO statistician Colin Hanley said in a statement.

Although some companies reported "significant" losses in sales, the CSO survey indicated many businesses believed they would be in a position to reopen when the lockdown starts to ease.

More than half of companies said turnover for the five weeks from March 16, when the lockdown came into force, to April 19 "was significantly lower than normal", while just over 16pc reported turnover was "slightly lower than normal" to the CSO.

As of April 19, just over one in 20 of the companies said "they were not confident that they had the financial resources to continue operating", while one in five said they did not know whether the business had the financial resources to continue operating throughout the ­crisis.

Nonetheless, the survey did indicate many companies, especially larger ones, would be in a position to reopen.

Confidence

One sign of business confidence is where a company has put in place measures to maintain links between companies and their workers, and the CSO survey showed that 47pc had taken up Revenue's temporary wage subsidy scheme.

According to the most recent figures, the number of workers on the wage subsidy scheme has risen recently and hit 427,000 this week.

Still, the survey showed many businesses were not in a position to retain their employees and that over a third of those surveyed had let staff go, while another third said hours had been cut.

Industries and their lobby groups are pressing the Government to come up with support packages, especially in the hard-hit hospitality sector where there have been calls for the abolition of VAT.

There has been forgiveness of rents during the lockdown, but those businesses that do survive have been racking up many of their fixed costs like insurance and rent while not having revenue to pay those bills.

That means they would be heavily indebted and many could collapse rather than being in a position to take on workers.

The Government is still looking at various measures, including loans and grants.

Irish Independent