Investors tighten the purse strings

A survey conducted by the Polish Chamber of Commerce (KIG) among entrepreneurs revealed that almost half of them do not believe that conditions for business will improve next year. Analysts expressed the biggest concern over entrepreneurs' reluctance to make new investments or create jobs. Only 48 percent of entrepreneurs plan to increase their investments in 2006 as compared to 54 percent last year, while 44 percent state that their investments will remain at the same level.

"The level of planned investments is a real disappointment - we expected a double-digit increase and in Q1 2005 it was a mere one percent. Without a significant increase in investments, we can forget about decreasing unemployment," said Piotr Kuczyński, a WGI analyst.

The pessimism stems from a report that one in three companies wants to hire new employees next year and nine percent plan lay-offs. In 2005 new jobs were created by 32 percent of firms while 15.4 percent laid off some employees.

"Excessive bureaucracy and excessive taxation are to blame for the situation," said Marek Zuber, an economic adviser to the Prime Minister. "Within three or four months the government will present specific proposals to try and help remedy the situation. If we manage to implement them, investments will increase."

This scenario is doubtful though, as the research was conducted at the height of electoral campaigns when the general expectation among entrepreneurs was that the new government would be made up of a coalition of Law and Justice and Civic Platform. Such a configuration filled businessmen with optimism for the economic future of the country.

However, 64 percent of entrepreneurs expect that in 2006 their financial results will improve.