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Nearly 200,000 Businesses Closed in Poland in 2023

BUSINESSNearly 200,000 Businesses Closed in Poland in 2023

In 2023, a total of nearly 200,000 applications were lodged in the Central Register of Economic Activity (CEIDG) for the termination of individual business activities (JDG), representing an increase of nearly 3% compared to 2022. Self-employed individuals, without a specified business location, were the most active in this regard, with over 36,000 instances. The Mazowieckie region led in terms of activity, with nearly 26,000 cases, while the lowest was in the Opolskie region with over 3,000. Most businesses were closed in January and the least in July. Additionally, nearly 373,000 entities were suspended in 2023, over 7% more than the previous year. Though the increases are minimal, experts consider them unfavorable, suggesting that the government’s priority should be to develop an economic model that allows creative and energetic citizens to grow their businesses.

According to data from the Ministry of Development and Technology, 198,4 thousand applications for termination of individual business activities were submitted to the CEIDG in 2023, 2.7% more than in 2022 when such cases totaled 193.3 thousand. Unfavorable conditions for running microenterprises in Poland, combined with issues like ever-changing legal status, increasing business costs, including taxes and wages, contribute significantly to the downfall of many small businesses.

Dr. Grzegorz Wojtkowiak, from the University of Economics in Poznań, points out that managing business activities during and after the pandemic was associated with significant uncertainty, including supply disruptions in various industries. This was further exacerbated by the subsequent rise in prices, mainly energy, and other raw materials, making planning and investment execution more difficult.

In this context, the increase in the number of people closing their businesses is concerning. It should be a priority for the government to develop an economic model that will enable creative and dynamic citizens to develop their businesses – suggests legal counsel Łukasz Goszczyński.

On the other hand, Piotr Soroczyński, Chief Economist of the National Chamber of Commerce, notes that many people who are employed also run their businesses, often on a small scale. In a situation where they have to pay double insurance contributions without having a developed income business, such activity is no longer profitable.

Data from individual months of 2023 shows that the most applications for termination of individual business activities were received in January, December, and March. The least, however, were in July, June, and August.

Data from the ministry also reveals how many applications for the termination of individual business activities were received in various regions. The ranking was led by the Mazowieckie Province, with close to 26,000 requests.

In contrast, 36,3 thousand were without a determined location of business, and the Opolskie region was found at the bottom of the list. – The visible differences in the number of businesses conducted in the provinces are mainly due to the potential and size of the region. This situation has been repeating for years. However, the increasing number of registrations without an indication of the province mainly results from Poles’ increasing mobility – explains legal counsel Adrian Parol.

In addition, the ministry’s data shows that in 2023, 372,5 thousand applications for the suspension of individual business activities were received, 7.2% more than in 2022. As Łukasz Goszczyński explained, businesses are most often suspended when the current business model ceases to be profitable. Such a state allows for cost reduction, making it easier for the entrepreneur to survive a difficult period and reorganize the business model.

Adrian Parol predicts that if nothing extraordinary happens on the market, the number of closed and suspended businesses should remain at a similar level in the following months, with only a slight upward trend visible. The situation will become increasingly complicated unless the new government takes more decisive action. This will be most apparent at the beginning of the third quarter of this year.

The beginning of 2024 might prove to be quite difficult, not only due to persisting inflation or uncertainty about energy prices but also due to the increase in minimum wage and salaries, which also affect social security (ZUS) burdens – concludes the expert from the University of Economics in Poznań.

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