We wanted to know how the rest of Europe was being affected by the financial turmoil. So we asked Nick Hood, a partner and insolvency practitioner at accountancy Begbies Traynor, to provide MT with some snapshots from his frequent travels on the Continent. In the first of an occasional series, our roving contributor tells us about why Poland thinks public-private partnerships can help it stave off recession...
"Arriving at Warsaw’s efficient modern airport gives the first hint of a country apart, still bustling in contrast to the quiet of most business locations worldwide. Hotels are equally alive, clusters of business executives interacting all around the lobby.
In a strange parallel financial universe, Poland is the only European economy not in recession, although only just. Recent forecasts suggest a marginal 2009 growth rate of 1%, although local bankers and professionals are sceptical. Meetings take place with an undertone of fear for the future, sometimes expressed openly. But more often the concern is hinted at by cautious attitudes amid the pride at progress in overturning decades of entrepreneurial repression under the dead hand of Soviet command economy control.
Ironically, some of the underpinning for Poland’s relatively good performance has come from German and Slovakian buyers crossing the border to take advantage of the Zloty’s weakness against the Euro by buying cheap cars. Unfortunately, Poland is obliged to join the Euro as part of its EU accession arrangements, so this boost will only be temporary. German buyers currently account for 10% of all new car sales in Poland.
More worryingly, the glorious Old Town area seems short of the usual tourist throngs. Only the Pilsner Urquell Brewery site is busy, as huge plates of blood sausage with onion and strong mustard are washed down with litres of beer against a background of jazz standards murdered with great gusto by a band of strolling musicians.
The good news is that huge amounts of EU money (estimated at up to €67bn up to 2015) are available to fund much needed development expenditure, especially in the vital area of infrastructure modernisation.
Even better, the Polish government pushed through Public-Private Partnership legislation last December to create a positive framework for the deployment of these and other resources.
The challenge is to get buy-in for projects from local government bodies and to upgrade management skills and attitudes, some of which inevitably still reflect decades of state influence. A foundation called PPP Centrum has been created, which enjoys the support of many of Poland’s leading law, accounting and consulting firms, as well as some leading banks. Its task is to support and encourage this new business model.
A PPP conference has been arranged for this autumn focussing on the key area of healthcare, in partnership with BGN Sollers Polska, a specialist healthcare consultancy within Poland. Well over a hundred hospital managers and local authority officials are expected to attend. Experts from the UK and Canada will contribute to what promises to become a landmark event in the modernisation of the economy.
There is much still to do and the worldwide recession threatens to make progress slower than it need be. But with a February 2009 JP Morgan paper identifying Poland as the most attractive destination for inward investment in CEE, we must hope that the West will bring cash as well as expertise to the aid of one of the world’s most promising emerging markets."
In today's bulletin:
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Nick Hood: How Poland plans to stave off recession