Poland presents new spending package to boost post-Covid growth

Poland’s national conservative government has unveiled an ambitious economic stimulus package to boost post-pandemic growth.

Midway through its second term, the ruling Law and Justice (PiS) party has one eye on sliding political support and new political challengers for its centre-right voter base, analysts suggest.

Key to the “New Deal” programme is a boost to health spending by 2023 equivalent to 7 per cent of gross domestic product. After many Polish hospitals faced near-collapse in the pandemic, the plan promises to increase spending on medical facilities, tighten up medical standards and a negligence compensation fund.

A major source of funding for the programme is a 770 billion zloty (€170 billion) contribution from the EU post-pandemic Next Generation recovery plan – passed in Poland only after a high-stakes stand-off between ruling coalition parties.

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Presenting the package, prime minister Mateusz Morawiecki said it reflected his government’s “belief in Poland’s strength”.

“For the first time, we can take our fate into our own hands with this programme,” he said, promising to use EU money to modernise the country while warding off “foreign” threats to its Catholic roots.

The plan boosts the tax-free allowance by a factor of 40 to 30,000 zloty, (€6,600), creates a 12,000 zloty (€2,700) second-child allowance for parents and gives retirees largely tax-free status both on any earnings and their pension.

In addition the programme promises extra spending on nuclear and renewable energy to reduce energy import dependence, and large-scale investment in road and digital infrastructure.

Nervous coalition

Many observers see in the deal’s ambition a reflection of the ruling coalition’s growing nervousness. Nearly a year after securing election with 43 per cent, coalition infighting and anger at the government’s response to Covid-19 has seen a 10-point slide in support.

European statistics suggest that, with 123,000 deaths in a country of 38 million, Poland has had a death rate much higher than the average.

With the pandemic bringing the country’s highest death rate since the second World War, and the first recession since the fall of communism, some polls have seen PiS slip even below 30 per cent.

Opposition leader Szymon Holownia, whose Poland 2050 party is in second place behind PiS, smells an opportunity for change.

He says it is difficult to trust the government, given its ongoing stand-off with leading European courts – and the European Commission – over the legality of its judicial reform programme.

Two weeks ago the European Court of Human Rights in Strasbourg dismissed Poland’s constitutional court as an illegal tribunal and warned Warsaw that at least five more such rulings were looming unless it reformed how its courts worked.

Warsaw has yet to say whether it will accept or challenge the Strasbourg ruling, a verdict Warsaw’s constitutional court president has insisted has no relevance for Poland.

“All EU member states are party to the European Convention on Human Rights,” said a European Commission spokeswoman. “And this means that all member states must comply with ECHR rulings.”