Business blues

Entrepreneurs from the Polish Confederation of Private Employers (PKPP) Lewiatan have come out against the 2007 budget draft, calling it a step backwards. They say the government's assumptions about budget income growth are too optimistic, and criticize the plan for setting expenditures higher than income, as well as for its increased social spending. Coupled with slower privatization and the drainage of state-owned companies' revenues, the group says the government isn't taking advantage of an opportunity to lower the budget deficit and clean up public finances while macroeconomic conditions are favorable.

"Economists have no doubt that it will be to our detriment, but the politicians seem to be far from such thinking. They constantly think that they can build their prognoses and their economic policy by looking at today's good situation," says Henryka Bochniarz, president of PKPP Lewiatan.

The political situation has not yet had a significant effect on the economy and foreign investments, but could affect them in the near future, according to Bochniarz. She believes that the government's policies will result in a slowdown in economic growth in the second half of 2007, as well as rises in inflation and interest rates.

Bochniarz believes the current political situation will not result in earlier elections. She thinks Law and Justice (PiS) will form a minority government and try to implement what elements of the budget it can, which will mean a continuation of unstable conditions for SMEs.

According to Lewiatan, almost 50 percent of entrepreneurs say that the political situation has a negative influence on the potential development of enterprise, which is much higher than the percentage of entrepreneurs who complain about interest rates being too high or the currency too strong.