Growth hunger and inflation uncertainty at European companies

By: Gáspár Kinga Date: 2022. 07. 05. 15:30

More than 70 percent of Hungarian business leaders expect payment problems to increase due to rising inflation and interest rate hikes. At the same time, domestic entrepreneurs feel much stronger than their European counterparts and have set aside resources to a greater extent to cover the expected growth or even unexpected problems, according to Intrum’s 2022 European Payments Report (EPR). According to the survey, European companies do not feel prepared to handle non-payment risks caused by inflation – and Hungarian companies are no exception.

A fizetési problémák növekedésére számít a magyar cégvezetők több, mint 70 százaléka

After two years of the pandemic, European companies were hungry for growth, but the Russian-Ukrainian war and rising inflation apparently increased caution. Intrum prepared its European Payments Report (EPR) for the 24th time, more than 11,000 companies in 15 countries were interviewed.

In the 2022 survey, 55 percent of respondents said that the most important task for their company this year would be to restart business growth.

According to the survey, the profitability of companies recovered only slowly after the virus crisis: 52 percent of the respondents reported a decrease, of which 45 percent reported a profit that was still at a lower level than before, 10 percent reported an increase, and 39 percent the profit remained at the same level – but the latter more than the half expect it to rain soon.

According to 51 percent of the respondents, the increase in inflation worsens the chances of growth, 55 percent agreed with the statement that it causes tension with employees due to demands for wage increases. According to 58 percent of the respondents, the accelerating rate of monetary deterioration also has a bad effect on solvency, since it will be more difficult to pay suppliers’ invoices on time due to rising prices.

According to six out of ten companies, due to the growth rate of inflation and interest rates, they should be more careful with financing and spending plans. Meanwhile, the proportion of those who claimed that their company does not have the necessary expertise to face the challenges caused by inflation is the same.

In the Eurozone, the worst situation is in Estonia, where inflation is the highest: previously, energy prices rose by 38 percent. 67 percent of Estonian businesses claimed that their organization does not have the necessary expertise to successfully manage the effects of price increases. In any case, a larger than average number of businesses in the Baltic states reported that their situation was weaker than before the pandemic. This rate is the highest in Lithuania, where two-thirds of businesses say they are in a worse situation today than before the pandemic.

According to the survey, Hungarian companies emerged from the crisis caused by the epidemic stronger than the European average. In the case of Hungarian businesses, the proportion of those who feel stronger than two years ago is significantly higher than the European average: 36 percent compared to the average of 23 percent.

Meanwhile, the proportion of Hungarian companies that consider themselves to be in a worse situation is 44 percent, i.e. 5 percentage points lower than the European average. The confidence of Hungarian businesses is also unique in the region. In the region, Bulgarian companies see their own situation as the most unfavorable, where 16 percent of companies feel stronger and 46 percent feel weaker. In Slovakia, the proportion of companies that said they were stronger was 26 percent, a higher proportion was measured in Bosnia, 31 percent, but this also does not reach the Hungarian indicator.