For some European economies, being part of the EU but not of the Eurozone could be seen to be particularly advantageous right now. This position has worked rather well for Poland over recent years, whereby the country has benefited from the highest amount of EU structural and cohesion funds of any member state − a total of €67.3bn in the period 2007-13, equivalent to nearly 3% of GDP per year – while managing to steer clear so far of the worst downsides of the enduring Eurozone financial crisis. 

However, despite Poland’s superior rate of economic growth since the onset of the global financial crisis, with its diversified economy and essentially robust institutions and a large domestic market, Polish businesses are still finding it hard to avoid the ramifications of the recession that is continuing to put the brake on their main trading partners.  

This situation is being felt most keenly by small and medium-sized enterprises (SMEs), which form the bulk of the economy. Access to funding for this business sector has been badly affected by the reduction in lending and harsher loan conditions introduced by banks, the traditional source of finance. The smaller the business – micro-enterprises generate a considerable proportion of Poland’s GDP – the greater the threat to cash flow. 

This is where leasing becomes the prime, if not the only available source of funding. Although the Polish economy is still defined as ‘emerging’, the leasing market is well-established, relatively mature and highly competitive. In 2012, according to the Polish Leasing Association, new business volume in all leasing sectors totalled PLN31.2bn (around US$9.7bn / €7.6bn) and although it represents a flattening off after noteworthy rises since 2009, this is a level which the industry predicts will be maintained in the coming year.  

For 2013 at least, with all the indicators showing a flat macroeconomic climate, pressure is likely to be placed on pricing. However, the emphasis for lessors should be on promoting flexible options, and on developing more innovative and efficient solutions to stimulate demand and interest in leasing. 

Given the likelihood that bank lending will become harder for many firms to access, the opportunities are there for lessors to increase the support they can provide for the machinery and equipment sector in the near term. Support from the EU should continue to help sectors such as agriculture, which has witnessed a surge in equipment leasing, but it may be down to initiatives from the national government to provide the necessary boost to the important construction sector. This sector slumped in the vacuum following the preparations for the Euro 2012 football, but proposed housing initiatives could bring about a revival.  

In the longer term there is great potential for lessors to diversify into more consumer-orientated sectors such as personal car leasing. In the meantime, the government can also help here by implementing changes that are being called for to VAT legislation on the leasing of passenger cars for business use, a change that would benefit both lessors and many microenterprises and SMEs. This would be a further indication that the Polish government is prepared to make positive amendments to legislation which can aid the development of the leasing market. 

The White Clarke Group Poland Asset and Auto Finance Country Survey is available to download here: http://www.whiteclarkegroup.com/knowledge-centre/category/country_reports/poland_asset_and_auto_finance_country_report