More businesses are closing this year than previously, but not at crisis rates, Government officials told TDs and Senators on Wednesday.
Insolvencies are increasing in the Republic, according to Anne Marie Walsh, principal officer with the Department of Finance, but she noted that State aid had kept business failures artificially low during the pandemic and inflation crisis.
She told the Oireachtas Joint Committee on Budgetary Oversight that insolvency rates were coming back up to normal levels “but we’re not seeing anything immediate in the data that we’re studying that suggests that there is a crisis.”
Her colleague, Sinead Ryan, noted that insolvency rates last year continued to remain below their 2019 level.
Department staff were responding to questions from chairman, Fianna Fáil TD, Barry Cowen and committee members, who warned that many small businesses around the Republic were struggling with a sudden rise in costs.
Government measures including the increased minimum wage, employers’ social insurance and auto-enrolment in pension schemes had boosted businesses’ expenses, elected representatives said.
Maureen Marray, principal officer with the Revenue Commissioners, calculated that businesses owing €86 million in tax “warehoused” during the pandemic had “closed because of insolvency”. She noted that construction, wholesale and retail and food service, industries worst hit by Government Covid restrictions were seeing the most business failures.
Businesses still owe €1.17 billion in taxes warehoused since Covid but most owe less than €5,000. Michael McGrath, Minister for Finance, last week axed all interest due on those liabilities.
Mr Cowen highlighted the poor take up of the Government’s temporary energy support scheme, originally budgeted to cost €3 billion and aimed at more than 400,000 enterprises. It attracted just €153.8 million in claims from 125,000 firms. He suggested to officials that they provide the committee with data on how Government business support schemes had performed versus what they were projected to cost and to achieve.
Mr Cowen said this would aid Government when it came to establishing business support schemes in the future.
