The number of businesses that became insolvent during the first nine months of the year is up more than a third compared to the same period last year, PwC has found.
The consultancy said 661 firms fell into insolvency during the period, up 35% on the 491 in the same period of 2023.
Given the current environment, the organisation now expects the number of insolvencies this year to top 900.
However, PwC said that the current insolvency rate per 10,000 businesses is still below the 20 year average of 50, despite more than doubling over the last three years.
"The intention of Budget 2025 was to put in place the policies and measures to support businesses and continue the country's positive trajectory," said Ken Tyrrell, Business Recovery Partner, PwC Ireland.
"While the broader economy is performing well, we do see certain types of businesses facing significant challenges in the months ahead, particularly for smaller businesses."
"And with the increasing cost of doing business in Ireland, we continue to see insolvencies rise in recent years from historic lows."
In terms of sectors most impacted, retail insolvencies jumped 77% in the third quarter to 76 and it has the highest number compared to all other industries for the year with 162 to date.
This means retail has now accounted for one in every four insolvencies so far this year.
However, the hospitality sector follows close behind, making up nearly a fifth of all insolvencies for the nine months to the end of September, leaving some €37m in debts.
Despite the issues facing the sector and the failed calls for a cut in the VAT rate in the Budget, hospitality insolvencies did stay steady for the third quarter of the year, with 31 recorded, up just one on the previous three months.
But hospitality is one of the most adversely affected industries with an annual insolvency rate of 58 per 10,000 businesses, double that of retail and three times construction.
PwC predicts that insolvencies in the hospitality sector can be expected to rise steeply in the first quarter of next year, as in previous years struggling businesses manage to stay open through Christmas before closing.
"Both the hospitality and retail sectors are showing signs of stress and will be hoping for a busy trading period in the run up to Christmas, a traditionally very important time of year for both sectors," Mr Tyrell said.
"Helpfully, Budget 2025 has included a grant for businesses that will be given a cash injection of €4,000 "power up" grant which will be paid prior to Christmas, for all businesses with a rates bill of under €30,000."
There have been 32 Small Company Administration Rescue Processes recorded in the first nine months of the year, just 5% of all insolvencies.
There were 76 receiverships in the year to the end of September, similar to the same timeframe over the last two years.
