No. of new companies set up in ČR in H1 lowest in five years

Prague, Sept 11 (CTK) - A total of 11,421 new companies was formed in the Czech Republic in the first half of this year, 6 percent fewer year on year and the lowest number in the last five years, according to databases and calculations of agency Ceska kapitalova informacni agentura (CEKIA).

As many as 366,500 companies were registered in the country at the end of June, nearly 9,000 more than at end-2011, according to the data.

The reason for the fall in the number of new companies is poor economic situation, banks' unwillingness to provide loans, deteriorating payment discipline of companies, higher cautiousness of businesses, and also unstable legislative environment, raising of taxes and the debt crisis in Europe, the agency said.

"The state, companies and consumers save, the business environment has problems not only with the raising of taxes and unstable legislation. Banks are aware of the economic crisis or at least of a short-term decline so they are not extending the possibilities for gaining a loan. Thus, the preparation and implementation of a new business plan is becoming increasingly more difficult," CEKIA's analyst Petr Stepanova commented on the statistics.

"We also register further signals of deteriorating payment discipline of companies, which signals approaching economic downturn and lowers the motivation to start a new business," she added.

Of the total number of companies at the end of the first half of this year, almost 25,000 were joint-stock companies and 341,500 limited-liability companies, while 2,074 companies disappeared.

The highest number of companies was set up in 2007 when entrepreneurs took advantage of the economic boom. Riding the wave of general optimism, they often set up even companies which had no well-grounded business plan.

"The rate of disappearance of these companies naturally increased at the crisis time and the number of newly formed companies is decreasing. The reason is higher cautiousness and experience of entrepreneurs, as well as the market's saturation," Stepanova noted.

CEKIA, a part of the multinational group Bisnode AB, is a leading provider of digital corporate and economic information in Europe.