Dubious impact of interest rate cuts on corporate investments

In general, the central banks’ record interest rate cuts have had an insignificant impact on European companies’ investments. Sweden is among those countries where the impact has been the very lowest. This has been shown by a survey of business owners in 29 European countries. Slightly more than eight out of ten of the Swedish companies surveyed do not believe that the record-low interest rates have had any impact at all on their investments.

This is higher than the average among European companies, where seven out of ten do not believe there has been any impact from interest rates. This is evident from the European Payment Report 2015, in which 8,979 companies in 29 European countries responded to questions about how record-low interest rates and late payments have affected their opportunities to recruit new employees and make new investments. In Sweden, 775 companies participated.

• Of the Swedish companies, 5 percent actually believe that investment has decreased as an effect of the low interest rates.
• Of the Swedish companies surveyed, 11 percent believe that investment has increased.

“We need to generate predictability by means of broad political solutions that entrepreneurs and investors believe will apply for an extended period of time. To get the wheels turning faster and jobs being created at a higher rate, there are other factors than interest rates to focus on. A positive view of the future requires stability and predictability. A record-low rate does not signal stability, but rather that we are in an extraordinary situation,” says Lars Wollung, CEO of Intrum Justitia.

How have investments been affected by the low interest rates?/European Payment Report 2015

Quick payment means jobs

• From the European Payment Report 2015, it can also be discerned that slightly less than one in four companies (23 percent) say that there is a correlation between late payment and their being unable to recruit additional personnel.
• Of the Swedish companies, 13 percent say they would be able to recruit if they received payment more quickly. That corresponds to 85,000 Swedish companies that would be able to recruit new personnel.
• Seven out of ten companies (69 percent) say that the reason for late payment is a deliberate strategy on the part of the customer. Just as many (69 percent), say that late payments are caused by administrative shortcomings.
• In the survey, every second Swedish firm (50 percent) feel that longer credit periods are demanded of them than they are comfortable with.

“Our survey confirms that there is a clear link between healthy, predictable cash flows and companies’ ability to grow and develop. It is clear that stable and predictable cash flows result in companies being able to recruit. Consequently, strong factors motivating buyers to pay their debts ought to be high on the politicians’ agenda,” says Lars Wollung, CEO of Intrum Justitia.

Intrum Justitia at Almedalen

During the Almedalen Week, in which Swedish politicians and opinion makers meet and debate on the island of Gotland, Intrum Justitia will present the results of the European Payment Report 2015 at a seminar at the Donnersska House on Thursday, 2 July at 12:00 noon.

The seminar will include the following participants: Anna Felländer, Chief Economist, Swedbank. Dan Olofsson, entrepreneur. Peter Strannegård, Head of Operations, Customer Services, Fortum. Jessika Roswall, Member of the Riksdag (Swedish parliament) for the Moderate Party, Lars Wollung, President and CEO, Intrum Justitia.
Link to the seminar in Almedalen programme:
http://www.almedalsveckan.info/event/user-view/32441?redir=%23eidx_0

About The European Payment Report 2015

The European Payment Report is Europe’s largest survey about late and defaulted payments. The report is based on a survey conducted simultaneously in 29 European countries in March-April 2015. In the report, we compile data from thousands of companies in Europe to gain insights regarding payment behaviors and the financial climate among European companies. The European Payment Report is compiled by Intrum Justitia.

For further information, please contact:

Annika Billberg, IR & Communications Director, Intrum Justitia, +46 (0)702-67 97 91
a.billberg@se.intrum.com

Intrum Justitia is Europe’s leading Credit Management Services (CMS) group, offering comprehensive services, including purchase of receivables, designed to measurably improve clients’ cash flows and long-term profitability. Founded in 1923, Intrum Justitia has some 3,800 employees in 20 markets. Consolidated revenues amounted to about SEK 5.2 billion in 2014. Intrum Justitia AB is listed on Nasdaq Stockholm since 2002. For further information, please visit www.intrum.com