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Small construction firms closing down

In Hungary

Since the beginning of last year, the number of firms in the construction industry that have pull the plug on their businesses is on the rise, and in the second quarter of this year alone, the registration court removed 1,771 companies from the register; this is 11% more than the previous quarter, and one third more than the same period last year, company database Opten Informatika kft. noted in a press release yesterday.

This is the highest number of companies to date in the construction sector that the registration court has had to remove from its register. “After last year’s encouraging recovery, it seems that new orders are declining. And the large investments supported by EU funds did not aid in the recovery of smaller firms,” said Tamás Tóth Chief Executive Officer at Opten Kft.

According to Tóth, the housing market in the capital has switched into high gear and with the help of government subsidies used to refurbish smaller dwellings, this is hardly enough to bring smaller contractors out of a slump that has existed for years.

The termination of smaller firms, however, is not likely to have a significant impact on the rest of the sector, nor the central budget, since the activity of most of these companies has been very moderate according to their balance statements. The most recent publication of the number of liquidations shows a steady decline, and also indicates a whitening of the sector, Tóth added. 

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