There are still many, but fewer and fewer new sole proprietors

In many ways, the July 2022 company information indicators have become very unusual. A kind of seasonal effect is also typical of the summer months, but interestingly, company foundings are still at a high level in July, but by August they typically reach their lowest point every year. This year, however, the drop in company start-ups arrived earlier, which is more due to economic expectations than to the effect of the summer.

Gloomy market mood

According to Opten’s database, 2,031 company foundings were published in July 2022, which is the lowest value of the last 2 years, and in the years before that, only the first wave of the coronavirus and the cucumber season in August could bring company foundings lower than this. This year, the company founding value in July is particularly noteworthy, since with the tightening of the KATA regulation, there was in principle a chance that more individual businesses would be diverted in the direction of joint ventures. However, this effect is yet to be seen. All in all, the decline in company foundings in July clearly has economic reasons, the fear of recession, high inflation and loan interest rates are not favorable for businesses, especially those entering new markets.
This market sentiment is also confirmed by another important set of data, the trend in the number of settlements. Liquidations are the type of liquidation procedures for partnerships, when the enterprise voluntarily initiates the liquidation of the enterprise. In an average month, 7-800 liquidation proceedings are usually initiated in Hungary, but in July 1,261 liquidation procedures were initiated. Such high values ​​usually only occur in January, when many businesses close their operations permanently at the end of the calendar year. To have so many settlements published in the middle of the summer is quite unprecedented. At the same time, the liquidation value already partly includes the effect of the KATA tightening, as many limited partnerships fall under the scope of the law, some of which have deemed that they cannot continue their operations