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Central Bank Warns Business Insolvency Will Rise

‘Consumer sentiment at 14yr low’

The Central Bank of Ireland has warned of an emerging increase in business insolvency due in part to the “unwinding of pandemic supports and the onset of inflationary pressures”.

Speaking at the Business Show, Acting Deputy Governor Mark Cassidy, said these developments “are likely to expose a degree of latent distress in the economy”. 

Cassidy said that the economy had recovered at a surprising pace after the withdrawal of covid restrictions but that despite this “uplift last quarter in modified investment growth”, the Central Bank expects “growth in business investment to slow in the coming quarters.”

The Russia – Ukraine conflict is cited as having “exacerbated global inflationary pressures and prolonged some of the supply-side constraints that were present before the invasion, notably disruptions to global supply chains”. 

Inflation at home and abroad is said to be ‘at its highest level in 40 years’, while uncertainty about ‘costs, resource availability and tightening financial conditions make it more difficult for businesses to plan for the future’.

Headline inflation is predicted  to average 8%v this year and 6.3% next year ‘before moderating to 2.8% in 2024’. 

The CBI also warned that “businesses are facing the dual pressures of rising wage and non-labour costs”. 

It added that understanding “how businesses are responding to this situation is important for the outlook for consumer price inflation, employment and economic growth.” 


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