Polish economy revamp announced

17 May - baby
A key element of the newly announced ‘New Deal’ for the Polish economy is a renewed effort to boost the country’s low birth rate by offering financial incentives including mortgage subsidies per child and cash payments totalling PLN 12,000 for second and subsequent babies.

The following news items appeared in PT Daily, Poland Today’s daily business newsletter, on Monday 17 May – free to register here

‘New Deal’ for the Polish economy to cut taxes, boost spending on healthcare and subsidize children

Poland’s government has announced sweeping measures to stimulate economic growth in light of the COVID pandemic, the Financial Times, Bloomberg and several international business news outlets reported over the weekend. The measures (known as ‘Nowy Ład’ in Polish, directly translated as ‘New Order’ but termed in English as the ‘New Deal’ or ‘Polish Deal’) will reduce income tax for low and medium earners and are designed to push more workers from self-employment contracts to full-time contracts by raising social security payments and removing a cap on those payments for the self-employed. The income-tax-free allowance will rise from PLN 8,000 p/a to PLN 30,000, and the threshold for the higher tax band will jump from PLN 85,000 p/a to PLN 120,000.

There will also be a significant rise in spending on the national health service from just over 5% of GDP to 7% of GDP by 2027, and mortgage loan rules will be overhauled to make credit more accessible, including giving subsidies for families with more than one child. Another measure aimed at boosting the birth rate is financial support worth PLN 12,000 on the birth of the second and subsequent children aged between 12 – 36 months in a family. 

As commentators have pointed out, the programme is enabled by EU funds and loans, although the Finance Minister, Tadeusz Kościński, is quoted in the FT as saying that it will partly be funded by expected faster growth. Opposition politicians have accused the government of trying to shore up its position with the electorate ahead of parliamentary elections which must take place before the end of 2023. 

 

Consortium selected to build new Warsaw – Łódź train line

The Solidarity Transport Hub (Centralny Port Komunikacyjny, CPK) has selected the tender offer of the IDOM, Multiconsult, Transprojekt Gdański and Arcadis consortium for a 140-kilometre section of track of the Warszawa Zachodnia (Warsaw West station) – CPK – Łódź railway line, according to STH. The new line will allow passengers to travel from Łódź to Warsaw in 45 minutes, almost twice as fast as now, according to STH. The STH Railway Programme  envisages the construction of almost 1,800 km of new lines to be built by the end of 2034. These investments include a total of 12 railway routes, including 10 “spokes” leading from various regions of Poland to Warsaw and the planned Solidarity Airport, to be located 37 km west of Warsaw.

 

GDP decline slows ahead of expected growth upturn

Poland’s Gross Domestic Product fell by 1.2% year-on-year in Q1 compared to a decline of 2.7 % in the previous quarter, according to the first estimate of Statistics Poland (GUS), Seasonally adjusted GDP in Q1 was lower by 1.7% compared to the previous year but increased by 0.9% on a quarterly basis. Economists expect that quarterly growth will mark the beginning of a sustained GDP rebound, leading to an exit from the recession. The complete data of the GDP estimate for the first quarter of 2021 will be published on May 31.

 

Encouraging trends in shopping centre footfall 

Average footfall in shopping centres on 3-8 May reached 97% compared to pre-pandemic rates in 2019, according to data of Polish Council of Shopping Centers (Polska Rada Centrów Handlowych – PRCH). On Tuesday 4 May, centres were visited by an average of nearly 14,000 people, a figure 74% higher than in May last year. The first sign of an optimistic trend was observed in February this year when the turnover in shopping centres reached a level higher than before the pandemic.

 

Kraków receives last delivery of 50 electric buses

The country’s biggest bus manufacturer Solaris Bus&Coach have delivered the last of 50 new electric buses ordered by the city of Kraków. The contract for the supply of the 43-seat Urbino 18 electric buses was signed last May, with a value exceeding PLN 165.4 million gross. For the purchase of the buses, Kraków obtained c. PLN 110 million in subsidies from the European Union.

 

NBP monitoring concept of central digital currency bank

Analyzes carried out by the National Bank of Poland (NBP) show no clear benefits from the introduction of Central Bank Digital Currency (CBDC) in Poland, the President of the National Bank of Poland, Adam Glapiński, said. However, NBP is “closely monitoring” the progress on the issue of CBDC globally so that – if necessary – it can take steps also in Poland, he added. Central banks around the world are eyeing the introduction of digital currency to modernize financial systems, respond to potential risks from cryptocurrencies, and reduce the amount of cash in circulation. Recent research for the Bank for International Settlements shows that at the end of 2020, 86% of 65 global central banks surveyed were involved in studying the CBDC issue. 

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Written by: Richard Stephens