Dear Members,
we are a few days before the anniversary of the lockdown announced in Poland on Friday 12 March 2020. We all remember the turmoil and uncertainty as we readied our businesses for the effects of what would be the most serious long-term disruption to society that most of us have ever faced. Today, with hopes high that an effective vaccination programme will get the pandemic under control, we can plan for recovery.
This is the first issue of Contact Magazine Online since the UK left the single European market and Customs Union at the end of the transition period that followed Brexit. It is also the fifth issue since Covid changed our world. How has Brexit – set against a background of a global pandemic – changed the balance of economic power between the UK and Poland? How is it changing the way companies do business between our two countries? With three interviews and 18 articles, Contact Magazine Online brings you different perspectives on this question. We’ll be looking at the prospects for trade, investment, education.
The IGCC Foreign Direct Investment Report published in January 2021 shows Kingfisher plc, trading in Poland under the Castorama Polska banner, being the third-largest corporate foreign investor in Poland after telecoms operator, Orange, and steelmaker, ArcelorMittal, and in 15th place among the largest foreign employers in Poland.
Magdalena Szczepańska, director, head of International Clients Office, Bank Pekao S.A. talks to the BPCC’s Michael Dembinski about inward investment into Poland in the wake of Brexit and future trends in the Polish economy as the country emerges from lockdown
Agnieszka Janicka, Warsaw office managing partner at Clifford Chance, and Krzysztof Hajdamowicz, counsel at Clifford Chance, talk to the BPCC’s Michael Dembinski about Poland’s perception as a place to do business, at a time when major foreign investment decisions are being made in the wake of global changes.
Although the UK formally left the European Union on 31 January 2020, thanks to the transition period, for businesses and consumers Brexit really took effect on 1 January 2021 when the UK withdrew from the single European market and Customs Union.
Zero tariff only for goods ‘originating’ from the UK
Despite the UK’s departure from the EU, the parties managed to sign off in December 2020 on the Trade and Cooperation Agreement (TCA) governing EU-UK commercial relationships from 1 January 2021 going forward. One of the pillars of TCA is the customs union between the EU and the UK, which waives duties on imports from the UK into the EU, and conversely.
Two months after the moment when UK finally left the EU, we can note significant changes in circulation of goods between EU and UK. These changes have affected a variety of areas of our life.
How will Brexit affect cross-border bankruptcy and restructuring proceedings involving the UK? Will judgments issued by an insolvency court in the UK still be recognised in Poland?
Two months after the UK left the single European market and Customs Union, the asymmetry inherent in the Brexit settlement has become clear.
There are several legal ways to conduct business activity in Poland. The ultimate choice of the should be made base on various aspects, as size of the enterprise, type of business (sales, production, finance etc), scope of accepted responsibility (limited or unlimited) or tax burdens. The legal form of running a business should be always subordinate to business goals. The legal form of an entity may also change over the time – one may choose a basic form at the beginning and a more expanded form when the business is big enough. In any case, it is good to consult plans with a tax advisor (confidentiality in such case is required by the law).
Following Brexit, Poland appears as one of the most attractive countries for UK companies considering foreign mergers and acquisitions. British multinationals, SMEs and private-equity funds were already actively engaged in such M&A transactions in the past: based on Mergermarket market intelligence data, UK investors have realised 97 M&A deals (with a deal value above €5 million) in Poland since 2010, for a total disclosed value of €9.3 billion.
2020 was a difficult year both due to the pandemic and various geopolitical events taking place around the world, which also influenced investment decisions made on a global scale. Despite the challenges faced by individual market sectors and the persistent uncertainty, in terms of investment projects Poland has not lost, but maybe even gained. The factors contributing to the rise in foreign investments in the country include the increased favour afforded to nearshoring rather than offshoring, and the consistently attractive ratio of the number of high-quality available workers to the costs of running a business.
The year 2020 made history and will be remembered but not necessarily for positive reasons. The Covid-19 pandemic has affected world markets, forcing governments to introduce unprecedented restrictions in our daily lives to counteract the spreading virus infection and consequently severely affected many economic sectors. All this coincided with the end of the transition period for the UK’s withdrawal from the EU. How have all these things affected the individual sectors of the commercial property market in Poland? Does Poland remain an attractive country for foreign investors?
Foreign investor interest in Poland and the CEE region has gathered considerable speed over the past several months. At the same time, changes are taking place in terms of the scope of requirements and the general characteristics of the analysis process for new business project locations. Poland is fast becoming one of the main beneficiaries of those changes (go to CBRE’s Market Outlook 2021 report to read more about it).
Cloud computing, AI and 5G are accelerating the growth of data centre development around the world. Increased demand for IT services and the rapid growth of e-commerce are key drivers of the growing interest of global tech companies across CEE. Warsaw is a hotspot for data centre development, says a report from global real estate services firm Cushman & Wakefield.
Indicators showing the results of economic cooperation between the UK and Poland are constantly growing. In the years 1995-2018, trade between the countries increased five-fold. Since the transformations initiated in 1989 until the end of 2017, British companies invested nearly 48 billion PLN in Poland (around £9.6 billion). And they are not going to stop, the best example of which are the recent investments in the Lodz Special Economic Zone (Lodz SEZ), recognised as third in the world and first in Europe by fDi Magazine.
The assistance of experts specialising in investment projects related to relocating resources – as in many other cases of outsourcing non-core activities – can add significant value for companies, which should focus on their core business processes, while counting on high-quality effective support for the development of their businesses.
31 December 2020 marked the end of 11-month transition period following the UK’s withdrawal from the EU on 31 January 2020. During the transition period, UK nationals remained free to travel into Poland for any purpose and to undertake any work or other gainful activities on the same terms as Poland’s own citizens (matching rules applied for all the remaining EU countries). From 1 January 2021, only a specific category of UK nationals – the so-called withdrawal agreement beneficiaries – have retained this right. The post-Brexit rules for working and conducting business in Poland are complicated for both UK nationals and the companies who employ them – how should you navigate them without running into legal trouble?
The economic crisis caused by the Covid-19 pandemic has hit global economies hard and unexpectedly. However, there are industries and sectors of the economy for which the current situation is sometimes advantageous. Even Brexit has not harmed them. These are the sectors of Medical Technology (MedTech) and Biological Technology (BioTech). They are involved in the fight against the pandemic and benefit from the market boom, where unprecedentedly huge amounts of money are pumped by almost all world governments. The MedTech sector supports the development and competitiveness of economies in which it operates. So far, the world has already spent well over $9 trillion in fighting the pandemic. According to the International Monetary Fund, the lion's share, $8 trillion, has been allocated by the governments of the G20 countries.
How one UK university has embraced the challenge.
In 2019, Kraków Balice Airport proudly welcomed its eight-millionth passenger with the hope that passenger numbers would keep on growing every month, and that the development of our airport will drive tourist traffic in the region. In 2019, Kraków Airport served nearly two million passengers flying to destinations in the UK alone, who could choose between 16 cities including Birmingham, Bristol, Liverpool, Belfast, London and Glasgow, with five carriers: British Airways, EasyJet, Jet2.Com, Ryanair and Wizz Air.
By Kazimierz Piekarz, Binaria Upgrade Marketing
"May you live in interesting times", the Chinese say, and that phrase is proving to be right, as from China has come a virus that’s changing the face of the world. A world used to continuously growing GDPs, ever-higher consumption and better wages, has had to hold its breath in the face of uncertainty.
Currently, banks generally refuse to make term deposits for companies, or else the rate of interest quoted is slightly above zero. To make matters worse, banks have introduced fees for keeping money in current bank accounts. As a result, companies actually pay extra for the balances in their accounts. It does not seem that this situation is going to change soon. Interest rates, both in Poland and globally, are expected to remain close to zero for a long time. The banking sector is facing record-high over-liquidity and there is little hope for immediate abolition of the banking tax. It is simply not profitable for the banks to maintain balances even with zero interest rate. Where should companies keep their financial surplus in such circumstances?
It is a BPCC January tradition to invite a panel of CEOs of member companies to discuss the outlook for Poland’s economy in the coming year. As we enter the second year of the pandemic, the 2021 panel was held, for the first time, in the form of a webinar.
At the gala ceremony concluding the 12th Polish National Sales Awards competition – held online for the first time ever – Poland’s leaders in sales and customer service were recognised for their commitment, results and positive approach. Across 19 categories, 15 winners and 23 distinctions were selected, and representatives of BPCC member firms were visible on the podium.
