The current political atmosphere in Poland is rather turbulent, according to Noerr Partner Radoslaw Biedecki, as the government is losing support and the opposition remains divided.
"The ruling party does not have a parliamentary majority, and therefore cooperation with smaller parties is necessary for legislative updates," Biedecki begins. "However, we do not expect significant change anytime soon, due to division of the opposition."
"The situation is further compounded by the recent ruling of the Polish Constitutional Court, which has not only legal but also major political implications," he reports. "The Court held that Polish national legislation should prevail over EU law. Some opposition leaders consider this decision a political statement that puts Polish withdrawal from the EU on the agenda." According to Biedecki, the ruling already has implications, as Poland is one of the last three countries that have yet to obtain EU funding. "'Polexit' would be a nightmare that would cause unpredictable consequences," he says.
Another major political issue in Poland relates to migration near the Polish-Belarusian border, Biedecki reports. "Migrants and refugees seeking to enter Poland and the EU are likely to be brought to that area by Belarusian authorities. However, the Polish authorities’ refusal to let them enter is sparking debate, since the government considers these people to be economic migrants rather than political refugees."
On legislative updates, Biedecki highlights the attempts to introduce a substantial tax reform, referred to as the Polish Order. "The proposal has not been adopted yet but, due to harsh criticism from the public and even members of the ruling party, the document has been modified significantly compared to its initial content," he says. According to Biedecki, if adopted, the proposal would lead to a 9% tax increase, which would most likely have a heavy impact on the Polish economy, largely comprised of micro and mid-sized entrepreneurs.
On the other hand, Biedecki notes that Poland has made up the pandemic-induced GDP loss, with 2021 witnessing an 11.1% GDP growth year on year, which indicates that the country has clearly managed to navigate the pandemic relatively well. "At the same time, official statistics report almost 6% inflation, and even that number might be misleading. If you look for instance at the prices of raw materials the inflation rate is even higher. Gas prices are over 9% higher than a year ago, electricity has also risen by over 9%, and fuel prices have increased by over 28% so far," he continues. "It will have an impact on our ability to continue our high consumption, which is the main driver of economic recovery, and considering the potential tax increase, it will be an important factor for the growth of the Polish economy in the coming years."
Additionally, Biedecki reports that 2021 might be a record year regarding the number of transactions. "So far in 2021, we have witnessed over 220 transactions with the three biggest ones for each quarter being Liberty Global’s sale of UPC Poland to Play Communications (Q3 2021), Trinseo’s sale of its synthetic rubber business to Synthos (Q2 2021), and the acquisition of Aviva Poland by Allianz (Q1 2021)," he explains. "The key sectors that drive the transaction industry in Poland are IT, TMT, fast-moving consumer goods, and the bio-health sector, and while there were a few big transactions in these sectors, the Polish market is instead focusing on mid-sized and small transactions," Biedecki concludes.