Blog by Michael Clay

EUROPEAN COMMISSION Approves Public Assistance for Polish Dell Plant

The European Commission okayed 54.5 million euros of regional aid for establishing Dell Products Poland's computer manufacturing plant in Łódź, yesterday.

The Commission decided that the investment project will significantly contribute to the regional development and job creation in a disadvantaged region of Łódź province, and that these benefits outweigh any potential negative effects of the aid on competition and trade.

The total value of Dell's investment in Łódź amounts to 189.6 million euros.

This is fantastic news for the Łódz region as Dell has already proved themselves to be one of the largest employers in the region making Łódź a huge centre for electronic manufacturing and assembly

We now need more and more companies from the UK and Europe taking up the opportunities that exist in Poland's second largest city.

The British Polish Chamber of Commerce have a Business Point Centre in Łódź which enables new busnesses to easily start up with a complete serviced office for next to nothing. Enquiries should be sent to us at Export Poland on the contacts form.

Zloty Pressured by Polish Fiscal Outlook

Recent weakness of the Polish zloty is the likely result of negative news on the 2010 budget outlook, Monetary Policy Council member Halina Wasilewska-Trenkner told the daily Gazeta Prawna.

Poland's planned PLN 52.2 billion zloty headline state budget deficit and, more importantly, a broader public finance deficit reaching towards 7% of GDP is "very big, both in nominal terms and as a percent of GDP."

"Countries don't usually gain credibility that way, but their reputation rather worsens," Wasilewska-Trenkner said.

"It is possible that information about the deficit and generally about the shape of the budget for next year will provide temporary downward pressure on the zloty."

Polish Banks Stop War Over Deposits

Polish banking sector is seeing the deposit war come to an end, with largest listed bank PKO BP cutting interest on household deposits by another 0.5 pps this week, the daily Parkiet writes.

Banks are reducing interest rates on deposits because they want to improve their interest income, DM Millennium analyst Marcin Materna stated. As a result, most banks will post a better interest result in Q3 than in Q2, ING Securities analyst Piotr Palenik added.

Perhaps this will mean more mortgages for the Poles and an end to the crisis in the housing market, where the cost of a mortgage had become so high and the loan to values meant high deposits needed to be found.

Poland's Economy Likely to Show Clear Signs of Rebound

Poland's economy is showing mixed signals and likely slowed in Q3, but should be showing clear signs of acceleration in Q4, Monetary Policy Council member Halina Wasilewska-Trenkner said of her economic outlook.

"The real economy is handling things very well and remains active," Wasilewska-Trenkner told PAP in an interview. But with headline inflation holding above the target range, "inflation pressure remains strong in the economy."

The Polish Agency for Enterprise Development (PARP) signed an agreement last Friday with Avio Polska under which the company will be granted EU Funds within the Innovative Economy Operational Programme.

Avio Polska will use the funds to construct a production technology line of a module for an aircraft engine GEnx-2B, the most modern device of the kind in the world.

The new engine is planned to be used in the long distance aircraft family of Boeing 747-8, which is to substitute the so called Jumbo Jet - the biggest passenger aircraft produced by the American Boeing.

The overall value of the project hovers around 100 million zloty. European financial aid should cover 33million zloty.

Poland will manage to reduce the unemployment rate by 1-2 pps in the next two years thanks to the bill alleviating the effects of the crisis, Labor Minister Jolanta Fedak told reporters.

"If the situation in autumn deteriorates, we have a solution which will allow us to reduce unemployment by 1-2 pps within two years," Fedak said.

Poland plans to spend over 1.5 billion zlotys for public aid in the frame of the anti-crisis package which came into force on August 22, Fedak said. The money will come from guaranteed employment benefits fund.

The unemployment level in July amounted to 10.8% vs 10.7% in June, according to stats office GUS.

Are airlines such as Easyjet and Ryannair trying to show how powerful they are? Are their tactics like Bully Boys?

Both of these airlines have stopped flying to Warsaw, the capital of Poland, and with the result that thousands of Polish nationals as well as many hundreds of business men are unable to fly there from their regular departure points, unless they use BA or Lot.

This situation is abominable and has come about as a result of Warsaw air services asking these airlines for an increase in service charges.  Easyjet and Ryannair both appear to have said they will not pay extra and threatened to withdraw from Warsaw. Clearly Warsaw air services assumed this was an idle threat, but the reality is that both airlines have withdrawn completely from Warsaw.

This has caused the loss of many jobs and a great deal of inconvenience among passengers who have relied on the service and the departure times. Perhaps both parties expected the other to cave in and come to an agreement. This has simply not happened.

When I contacted Easyjet they informed me that they had written to ALL of their regular passengers and asked them if they would pay an extra 7 Euros and the answer they got was NO. Now I don't believe this is correct as my partner and I fly to Warsaw 104 times each every year and must therefore be considered a regular passenger, NO contact was made with us. I therefore do not believe any of these matters were raised with their regular passengers at all.

I have spoken to HANNA GRONKIEWICZ-WALTZ, Mayor of Warsaw about this when she visited London last month, but she did not seem to be aware of the problem at that time.

I hope this can be resolved as Easyjet and Ryannair have been responsible for many new businesses and many new jobs being created in Warsaw over the past five years. Warsaw became a major city of Poland within the International business community as a result of the ease with which one could travel there.

Comments are invited, especially as we have just seen Ryannair use these same bully tactics at Manchester airport this week.

Current Account Surplus at 459m Euros
Poland recorded a current account surplus of 459 million euros in June, well above the 207 million euro surplus in May, according to central bank figures released Wednesday. The trade gap was 26 million euros. Exports fell 20.8% year on year to 8.314 billion euros. Imports fell 31.5% year on year to 8.340 billion euros. Is this not the the ideal time for British Businesses to export to Poland and for Polish companies to look for more sales in the UK. With current rates of exchange, the opportunity to do business is better than ever.  People - take advantage of this opportunity

Poland Can Adopt Euro in 2013 at Earliest: IMF Official
Poland can enter the single European currency in January 2013 at the earliest, the International Monetary Fund’s regional representative for Central Europe, Mark Allen, told the PAP news agency. But Poland need not rush to adopt the euro as the single currency "is no wonder drug, nor is it the Holy Grail," he said. Poland’s deputy Finance Minister Ludwik Kotecki announced last week that, “amid a completely different macroeconomic situation” the government will not be taking the country into the eurozone in 2012, as it had planned.

Poland's euro adoption in 2015 seems an optimistic but already realistic option, President Lech Kaczynski told a news conference, quoting an opinion of professor Gomułka, a liberal economist.

Comments follow Wednesday statement by deputy FinMin Ludwik Kotecki, who admitted that Poland will adopt the euro later than in 2012.

"Euro adoption plan in 2011 was unrealistic from the beginning, year 2012 was unrealistic too so the resignation is a step in good direction," president said, reiterating that "euro is not a remedy for the crisis."

It is a shame that the adoption of the Euro is being delayed but perhaps the enthusiasm of Donald Tusk is not shared by the Finance Minister.