Lessons from the month of December

As the festive season reared its tinselled head, several appropriately juicy news stories filled the news. Join us in reflecting on the month that was, and sharing what we’ve learned in the interim.

1. A rise in retail and hospitality insolvencies.

This should come as no surprise, but insolvency levels rose by a third in 2023 compared to 2022 with 717 companies entering insolvency compared with 545 in 2022, according to PwC’s Insolvency Barometer. Q4 of 2023 had the highest quarter of insolvencies since the pandemic with 229 companies entering some form of insolvency. Q4 2023 insolvencies were also 44% higher than Q3 of 2023 and 19% higher than Q4 of 2022.

As recently published in The Irish Times, PwC said it expects further increases in the business failure rate in 2024 with overall insolvency levels projected to reach close to 1,000, which would be closer to the average 20-year insolvency rate per year. An increased level of loan defaults within the commercial real estate sector is expected in 2024 too, PWC warned. Although the number of lender-initiated receiverships remained “relatively low” at 105 last year, this was up from 83 in 2022, with PwC predicting a further uptick this year. “Lender patience will be tested” in 2024 they finally said, as debt levels and interest rates continue to bite.

Ireland’s current insolvency rate per 10,000 companies is running at 25% of the 2012 peak, according to PwC. The retail sector had the highest number of business failures in 2023 with 144, an increase of 50% from 2022. Hospitality was the next highest with 127 business failures in 2023, up 53% from 2022. With 97 business failures, construction was the third most impacted sector in 2023.

2. The New York Times became the first major media outlet to sue ChatGPT for copyright.

The New York Times sued OpenAI and its biggest backer, Microsoft, over copyright infringement in December, alleging that the creator of ChatGPT used the newspaper’s material without permission to train the popular chatbot.

In August, NPR reported that lawyers for OpenAI and the Times were engaged in tense licensing negotiations that had turned acrimonious, with the Times threatening to take legal action to protect the unauthorised use of its stories, which were being used to generate ChatGPT answers in response to user questions. Then, the paper did just that.

In the lawsuit, attorneys for the Times claimed it sought “fair value” in its talks with OpenAI over the useof its content, but both sides could not reach an agreement. Watch this space to see where such an unprecedented case will go next.

3. Crypto is back?

Must be 2019, because Bitcoin is back in the news.

Though cryptocurrency had been rocked since the collapse of several major companies in 2022 – including FTX, which had become one of its biggest and best-recognised players – it appears that business is booming once more as bitcoin and other cryptocurrencies have staged an impressive comeback. Bitcoin, for example, has surged to above $43,000. (Its failure, the so-called “crypto winter” sent bitcoin to around $16,500, a sharp decline from its record high of around $68,000 on November 8, 2021.)

Cryptocurrencies surged soon after FTX CEO and founder Sam Bankman-Fried’s November conviction, and the survivors of the crypto winter also benefitted: Shares of Coinbase, another major cryptocurrency exchange that is under regulatory scrutiny, are up more than 400% this year.

However, tensions between regulators and crypto companies still exist, namely over the clear lack of rules about digital currencies. Ultimately, Congress could decide how crypto should be regulated, and whether they should be treated as stocks, bonds, commodities or something completely different — as crypto advocates want.

But with an election year in 2024, there’s little prospect for any meaningful regulations in the year ahead. So, while crypto may be back, the fight is far from over.

4. Inflation is as inflation does.

Inflation in the Irish economy rose to 3.2% in December, up from 2.5% the previous month. This maintained the price squeeze on households and dampened hopes of a quick end to the inflation crisis. (The increase in December was linked to higher transport costs, including airfares, which rose by 0.7% month-on-month.)

The upturn in price growth detailed in the Central Statistics Office’s latest flash estimate for the harmonised index of consumer prices (HICP) comes despite a significant decline in energy prices internationally, which had driven inflation lower in recent months.

Energy prices were estimated to have fallen by 2.6% in the month and decreased by 6.4% over the twelve months to December. Food prices, meanwhile, were steady on the month and were up by 5.2% in the last 12 months (in case you haven’t already noticed).

5. The family behind Purdue Pharma, of OxyContin-pushing infamy, were back in court.

The opioid crisis came to the Supreme Court in December as the justices heard arguments in a challenge to the bankruptcy deal meant to compensate victims of the highly addictive pain killer OxyContin.

Under the terms of the deal approved by a lower court, Purdue Pharma—the maker, aggressive peddler, and deceptive marketer of OxyContin— agreed to pay billions of dollars to those harmed in the opioid epidemic. In exchange, the deal would shield members of the Sackler family from personal liability, though they owned and ran the company.

The role of the Purdue family has been described at length in a number of films, books and series, like “Dopesick,” or “Crime of the Century.” “Within the last 20 years, more than 500,000 Americans have been killed by overdoses,” the latter documentary recounts. “This was a new drug cartel. They were drug dealers wearing suits and lab coats.”

Though exact details of the decision have not yet been published, it’s clear that the court was split in its decision-making. Whether or not money can release the Sackler family from personal liability remains to be seen.

In summary: As all of the trimmings of January begin to sit nicely on our laps (Veganuary, Dry Jan, NYE resolution-insistence) let us remember the bleary evenings of December with rose-tinted specs. No longer are we the sweaty, filled-to-the-brim, party animals that we once were, but instead more glorious specimens who eat our greens and do our workouts. (God, we’re bored.)

I think – I think? – though, that we’re better off for it. Indeed the news is, anyway. Usually, the first week of January is a total bore in the journalism world, however, this year’s iteration has been notably mental. Oscar Pistorius? Gypsy-Lee Blanchard? Calls for a British Government higher-up to resign? Listen, maybe some things stay the same.

In the meantime, let’s hope that this fresh start we’re all having applies to the countries’ economies too. And while things are looking decidedly vintage (Sophie Ellis-Bextor back in the charts, Bertie Ahern back in the news) everyone knows secondhand vibes are the best kind. Just ask the sustainability bloggers.

See you next month!

Our team is dedicated to providing you and your business with the absolute best business advice out there. We approach each and every case from a fresh perspective, working with you to find tailored solutions that leave your business feeling stronger than ever. With our expert analysis, we translate figures into a language you can understand. Using timely, reliable advice, our experienced team of experts devise sophisticated plans to encourage cost efficiency and growth. To find out more, contact our team at Fitzgerald Power today.