Bank of Ireland Business Banking today issued its latest Business Start-up Barometer that tracks the number of new businesses starting in Ireland and reported an 18.4% decrease in new Irish company registrations, when compared to Q1 2008.

Data on new companies, includes registrations of subsidiaries by existing companies.

The construction/real estate, and finance/insurance sectors saw the greatest fall in new business activity in Q1 2009, falling by 34% and 52% respectively compared with Q1 2008. Excluding these sectors however, overall activity fell by just under 10% year on year. The increase in business dissolutions, witnessed in 2008 continues into Q1 2009 - reflecting both the continuing pace of the economic slowdown and the level of business start up activity in preceding years. The bank says of note is the fact that the number of examinerships has decreased year on year, but the number of liquidators appointed, and those companies in receivership have increased.

There are substantial regional differences, in both the Business Start-up figures, and the dissolved company figures. Dublin continues to record the highest number of new start-ups, registering 43% of the quarterly total, which maintains the annual trend for 2008, although the number of new start ups for the county is down by 20.5% on Q1 2008. Dublin, and the east overall, also record the lowest percentage year on year difference in dissolved company numbers.

Longford, Offaly and Roscommon, Louth and Waterford, are the only counties to buck the national trend, and show increases in business start-ups, compared to the year on year quarterly figures for 2008. However, of these, only Roscommon, is below the national average for the number of dissolved companies, when compared to Q1 2008.

The number of failed companies has risen substantially year on year, with a total of 251 failed companies this quarter, compared with 105 in Quarter 1 2008. This number has more than doubled, and represents almost 7.5% of the quarterly new business start up figure. For all of 2008, the failure rate accounted for 4% of the overall business start up figure.

Damian Young, Head of Small Business, Bank of Ireland Business Banking, commented:

“The total start up figures come as no surprise as the year starts largely as predicted with a slow down in business start-ups and a reduction of over 18% year on year. However, we must not lose sight of the fact that there is a positive story here; 3,363 new businesses were formed this quarter, demonstrating the willingness of this sector to chart its own road to recovery. Despite the harsh environment, there are still some real opportunities for small businesses to develop and grow. The diversity of businesses set up in the last quarter is promising, and highlights the opportunities available – these businesses have identified new niches and market gaps.

“What’s more, history has shown us that more resilient businesses are set up in times of difficulty. Just look at Microsoft and Apple. Nonetheless, we recognise that there will be significant challenges for small businesses throughout the coming year. It is imperative that businesses remain focussed in the months to come. Businesses must have a clear customer focus, be innovative in reaching its customers and maintain robust financial disciplines. We are committed to supporting the SME sector in clear recognition of its importance in building Ireland through this downturn. We have established a fund to help businesses and we urge them to meet with their individual banks to discuss the best way to structure their finances through the economic turmoil”, added Young.