Highest number of insolvencies in five years – Euler Hermes

Image : shutterstock
Image : shutterstock

As many as 255 Polish companies became insolvent in Q3 2017, the highest number in five years. Since January, 673 companies became insolvent, which is a 14 percent increase y/y, said Euler Hermes in its report. The growth rate of insolvent firms will remain at a two-digit level for the remainder of the year.

According to Euler Hermes, the reason for the growing rate of insolvencies is the result of the increasing production costs, mainly due to higher labor and materials costs. In order to remain profitable, manufacturers have started to increase prices (in August the prices of sold production increased by 4.5 percent according to Eurostat, which was one of the highest readings in Europe), but it is still too early to see the positive impact of rising price on producers. “It also depends on whether growing prices will be accepted by the market,” said Tomasz Starus, risk assessor at Euler Hermes. He also added that the current situation is also caused by the fact that manufacturers can no longer increase their production scale without significant investments.

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