Major expansion opportunities have opened up for UK and Western European retailers as the credit crunch takes hold in Central and Eastern Europe. A report published this week by retail analyst Verdict found that the combined effects of the economic downturn and rapid inflation were likely to drive some players in the CEE region to the brink.

“As a consequence of the global crisis, we predict cashflow management problems for many smaller scale players and these could present great takeover opportunities for the multinational heavyweights, provided they can raise the capital to fund an acquisition or merger against the backdrop of the credit crunch,” said the report’s author Daniel Lucht, senior analyst at Verdict.

Tesco, which already operates in the Czech Republic, Hungary, Poland and Slovakia, declined to comment on its plans in the region. In 2007, the CEE retail market was worth €179bn (£145bn) – half the size of Germany –and it grew 56.4% between 2002 and 2007. The better-performing CEE retailers would also expand into new markets and further into old EU markets, predicted the research.