The first six months of the year saw a 48 per cent year-on-year increase in insolvencies, with significant collapse growth in key sectors including hospitality.
There were a total of 410 insolvencies recorded in the period, versus 277 for the same period in 2022, according to the latest figures from credit risk analyst CRIFVision-Net.
The period saw significant insolvency growth in key sectors including hospitality (214 per cent), construction (148 per cent) and financial services (37 per cent).
The chief executive of the Restaurants Association of Ireland, Adrian Cummins, described the increase in insolvency rates in the hospitality sector as “the perfect storm” because of a number of factors.
Restaurants, bars and the food service sector were now facing an increase in the VAT rate which would lead to even more challenges for the sector, he told Newstalk radio.
There were no insolvencies in the accommodation sector, it was predominantly in food businesses, he added.
The forthcoming increase in VAT, on top of warehousing taxes due to the Exchequer, to the value of about €450 million from restaurants and accommodation alone, was going to lead to more insolvencies, Mr Cummins warned. Now was not the right time to increase VAT, he said.
It was possible to separate the food sector from the accommodation sector when it came to VAT, he said. “That’s an absolute red herring,” he replied when it was pointed out that the accommodation sector is doing very well. Separate VAT was already done on restaurant bills where wine was at a different VAT rate from food.
He said there was a willingness among backbench TDs and the public for such a separation of VAT rates. “That conversation is going to happen over the next while.”
Mr Cummins predicted that there would be more insolvencies in the coming months because of the “perfect storm” of factors, including the lack of accommodation in some tourist areas that traditionally relied on tourists who were not visiting and frequenting restaurants.
