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Companies expect favorable changes in public charges and corporate loan interest rates

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Companies expect favorable changes in public charges and corporate loan interest rates

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There is a huge difference in expectations according to company size.

The K&H SME confidence index, which indicates the expectations of Hungarian micro, small and medium-sized enterprises for the next year, continued to strengthen and may slowly reach the positive range. The positive change is due to the fact that companies expect a more favorable development of public charges and corporate loan interest rates, K&H said. Based on the bank’s latest research, the K&H SME confidence index rose by 3 points in the first quarter, from minus 7 to minus 4 points.

In the announcement, it was highlighted that there is a huge difference in expectations according to company size: micro-companies are stuck in the negative range, while medium-sized companies, after a jump of more than 25 points, already have a very positive view of the year ahead.

They touched on the fact that, according to the European Commission’s forecast, the economy, including businesses, will slowly but gradually adapt to higher energy prices and inflation, but growth is expected to remain subdued this year. This is also shown by the K&H SME confidence index.

Based on the survey, companies see the development of public charges and corporate loan interest rates in the next one year much more favorably. The proportion of companies expecting increasing taxes and contributions decreased from 59 percent to 49 percent in two quarters. Businesses have reached a turning point in corporate loan interest rates.

“For the past two years, the companies have planned for continuously increasing interest rates, which reached the peak in the history of the index in the third quarter of 2022. At that time, the sector predicted a 5.5 percent increase in interest rates. Since then, however, expectations have eased and this value has decreased to 2.5 percent.” – the results were detailed by Zoltán Rammacher, head of K&H SME marketing and sales support.

Since 2004, K&H has been continuously preparing a quarterly SME confidence index in Hungary. In the most recent research, the business decision makers of 400 Hungarian-based companies with an annual turnover of less than HUF 2 billion were interviewed between February 20 and March 17, 2023.

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