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10 September, 2021updated 12 Oct 2021 06:08

How the Polish Deal will strengthen Poland’s economic recovery

The ambitious ‘Polish Deal’ Development Programme and a record EU stimulus package pave the way for years of economic growth in Poland, according to Stanisław Pietrzak and Wiktor Shmeruk of CEC Group.

By Wiktor Shmeruk and Stanislaw Pietrzak

poland-andrzej-duda

PiS, the party of President Andrzej Duda, has launched the ‘Polish Deal’ to maintain the country’s economic momentum. (Photo by Attila Kisbenedek/AFP via Getty Images)

Poland recently unveiled its new long-term development programme and policy package, called ‘the Polish Deal’. Key policies assumed by the programme, including a significant overhaul of the tax system, are expected to come into force by the end of 2021. Still, the entire policy package will be relevant for years to come. The Polish Deal is meant to coincide with the most extensive EU stimulus package in history. The EU’s 2021–27 budget, together with the NextGenerationEU recovery instrument, will come in at a whopping €2.02trn ($2.39trn) in funding for the entire bloc, with Poland being one of the key beneficiaries of these funds.

Regulatory and investment proposals will be introduced gradually over the coming months and even years. The proposal is built around ten crucial aspects: health, labour and taxation, agriculture, education, digitalisation, investments, entrepreneurship, family policy, climate and environment, and policies related to the elderly. As expected, the Polish Deal is not a comprehensive, step-by-step plan but rather a loosely connected set of policy and investment proposals. Still, the programme will likely provide new political impetus and serve as the country’s engine ahead of the next election season.

What does the Polish Deal contain?

Some of the critical reforms assumed by the Polish Deal include:

• An increase in total healthcare expenditures to the level of 7% of national GDP by 2027.

• A reduction in taxation for 18 million Poles.

• Investments that will generate 500,000 new jobs.

• Projects aimed at bringing a green revolution to Poland’s industries.

• Mortgages with no own contribution and changes in the building code allowing the building of a house of up to 70m2 without having to apply for a building permit.

• Tax exemption on pensions lower than 2,500 zloty (€550).

Furthermore, over the coming months, the government is planning to regionalise the Polish Deal. The regionalisation of the ruling PiS’s new development programme is supposed to provide tailored solutions accounting for the characteristics of each of Poland’s 16 voivodships and identify concrete investment projects to be realised in specific parts of Poland.

At the same time, the government has prepared Poland’s National Recovery Plan, which is supposed to pave the way for financial support from the EU. The plan includes the distribution of 108bn zloty of the EU’s Recovery Fund grants to projects grouped into five categories:

  1. Resilience and competitiveness of the Polish economy – 18.7bn zloty
  2. Digital transformation (telecoms and cybersecurity) – 13.7bn zloty
  3. Green and smart mobility – 27.4bn zloty
  4. Green energy and reduction of energy intensity – 28.6bn zloty
  5. Efficiency, availability and quality of the healthcare system – 19.2bn zloty

For investors and public affairs professionals in Poland, this creates an exciting opportunity. For the first time in Polish history, such a large stimulus of EU funds coincides with the creation of a long-term domestic development plan. The Polish Deal itself contains approximately 230 regulatory changes, investments proposals and policy reforms. So far, the National Recovery Plan includes close to 100 specific funding areas.

Instead of working on a short notice, ad hoc basis when seeking cooperation opportunities with government entities or taking part in public procurement, investors can now plan ahead. Public affairs professionals can also hope to be more ambitious in their engagement strategies rather than focus on reactive activities when unexpected regulatory proposals emerge.

Find details of CEC Group’s comprehensive report on the Polish Deal Development Programme and the assumption of the National Recovery Plan here.

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