SMEs Continue to Rely on EU Funds

Uncertainty surrounding EU tenders has only slightly dampened the confidence of companies, with around half of them still considering it realistic to obtain such funding, K&H told MTI on Wednesday, based on the first quarter results of the Hungarian Micro, Small and Medium Enterprises (SME) Confidence Index.

K&H has been compiling a quarterly SME confidence index in Hungary since 2004, with the latest survey conducted between February 20 and March 17, 2023, surveying business decision-makers of 400 Hungarian-based companies with annual sales of less than HUF 2 billion. The survey looks at the ten factors that most influence the economic situation of businesses.

It highlighted that 45% of companies consider it realistic to expect to receive aid, just below the 50% figure for the last two years. The bank said this figure could rise again in the coming quarters, as the adoption of judicial reform could open the way to EUR 13 billion in funding.

According to a K&H survey, agricultural and industrial firms are the most likely to receive EU support, with 59% in both areas. For the former, this is a 12-percentage-point drop and for the latter a 13-percentage-point increase compared to the previous quarter.

In trade, the 43% share is unchanged from the previous quarter, with the services sector the least likely to be realistic about receiving EU funding at 38%, the report said.

Fewer calls for proposals have meant that only 15% of SMEs have now come across a call for proposals that could interest their company. The lowest rate in the history of the index, 12%, has only occurred once before, in 2016. This has also led to a decrease in the number of applications submitted per business. SMEs submitted an average of 1.3 applications per company over the past year, compared to 1.5-1.7 in the past," K&H's head of SME marketing and sales support, Zoltán Rammacher explained in the release.