Louise O'Reilly
Question:13. Deputy Louise O'Reilly asked the Minister for Enterprise, Trade and Employment his views on the increased level of insolvencies in 2023. [5573/24]
View answerThursday, 8 February 2024
Questions (13)
Written answers
With low levels of economic growth internationally, and even forecasts of recession in some economies, it can be expected that Ireland will experience increasing levels of company restructuring. While company closures and even business failures are a normal feature of a functioning economy and of an entrepreneurial culture, there has been some suggestion that particular stresses are emerging in some sectors of the economy.
My Department is working with the Department of Social Protection on a report that examines the impact of forthcoming changes to working conditions. This report is supported by evidence received from both employer and trade union perspectives and will be finalised in the coming weeks.
PwC’s latest Insolvency Barometer further reveals that business failures in Ireland, though remaining below 2019 levels, are beginning to revert to pre-pandemic levels. For example, there was a significant increase in the insolvency rate in 2023 - reaching 27 per 10,000 companies compared to 36 per 10,000 in 2019 - but still well below the peak of 109 per 10,000 businesses in 2012. PWC also report that the UK insolvency rate is double that of Ireland.
According to data provided by the Company Registrations Office, incorporations were up 4.4% in 2023 compared to 2022.
My Department is carefully monitoring the situation and is continually developing and adapting its response. Budget 2024 contained a number of measures which will support businesses facing increased costs of doing business.
Ireland has modern and robust legislation which provides a clear restructuring framework for companies, and rights for employees. I wish to highlight in particular the Small Company Administrative Rescue Process which was introduced by this government, to provide for a new dedicated rescue process for small and micro companies. SCARP is an accessible and cost-effective restructuring process for small but viable companies experiencing temporary financial problems, and has been welcomed as a valuable addition to the State’s restructuring toolkit for our small company sector.
My Department has mapped out a strategic direction for developing the enterprise sector through the White Paper on Enterprise which will shape coherent cross-Government encouragement of a resilient enterprise base.
Finally, on Monday 5th February the Minister for Finance also announced significant changes to the Tax Debt Warehousing scheme with a reduction in the interest rate applying to warehoused tax debt to 0%. In addition, Revenue has confirmed that, where a business has already paid warehoused debt, which was subject to interest at 3%, it will get a refund of that interest. This will ensure that all taxpayers are treated fairly.