Guidance

Overseas business risk: Poland

Updated 24 July 2023

Information on key security and political risks which UK businesses may face when operating in Poland.

1. General overview

The EU’s 5th largest market by population, Poland has been one of Europe’s major economic success stories since it transformed into a market economy in the early 1990s. Poland’s growth has been driven by strong domestic demand, dynamic exports, improved productivity, foreign investment, a stable banking system, and a significant inflow of EU funds. Poland and the UK enjoy a strong and growing trading relationship worth £26.9bn in 2022, with bilateral trade in goods and services almost doubling over the past decade.

2. Political

Poland’s government is a conservative coalition led by the Law & Justice (PiS) party who, in October 2015, won the first overall government majority since the fall of communism in 1989. In the 2019 parliamentary elections, PiS once again won an outright majority in the Lower House (Sejm) but narrowly lost control of the Upper House (Senat) to the opposition. PiS’ programme focuses mainly on domestic issues. Policy measures have included increasing social transfers, lowering the retirement age, and supporting domestic (including state-owned) industries.

The President and Head of State is Andrzej Duda, re-elected for a second term in 2020 and allied to PiS. The President is responsible for some foreign and security policy matters but, for domestic policy issues, executive power rests largely in the Council of Ministers led by Prime Minister Mateusz Morawiecki, who was appointed in December 2017. The next Parliamentary elections are due to be held in autumn 2023, local and European Parliament elections in 2024, and Presidential elections in 2025.

On social issues, PiS is conservative, but on economic policy has positioned itself in government as more interventionist. Significant state ownership in some of Poland’s key industrial assets has created some market entry challenges. In 2015, Poland adopted a law requiring investors to get approval from the government to buy a stake of 20% or higher in strategic industries such as power generation, chemicals, and telecommunications. In December 2021, Poland’s President vetoed a bill which had been passed by the Sejm that would have prohibited non-EU entities from owning majority shares in media companies.

The PiS government has implemented a number of judicial reforms, most notably to the disciplinary regime for judges and the Constitutional Tribunal. This led to allegations from the opposition, civil society, and EU that the Polish government was attempting to politicise the judiciary and undermine the rule of law. As a result, the EU launched several infringement proceedings, with the European Court of Justice imposing fines in some cases. The EU continues to withhold recovery and resilience funding earmarked for Poland. Despite repeated efforts to unlock the funds, agreement is yet to be reached.

Bilateral relations between Poland and the UK are strong and have evolved into a strategic partnership in recent years. Our relationship has been complemented by our close cooperation in responding to Russia’s full-scale invasion of Ukraine.

3. Economics

In 2021, Poland was the 21st ranked economy in the world in terms of GDP (current USD), 22nd in terms of total exports, 17th in terms of total imports, 47th in terms of GDP per capita (current USD) and 28th in terms of complexity according to the Economic Complexity Index (source: Observatory of Economic Complexity).

Poland’s GDP is quickly catching up with longer-serving EU Member States. Its GDP per capita increased from 49% of the EU average in 2004 to 77% in 2021 when it stood at USD 17,960 (source: Eurostat, IMF). Poland enjoyed 28 years of unbroken growth prior to a slight downturn in 2020 due to the impact of the COVID pandemic. However, the decline was relatively mild – GDP fell by only 2.1% (source: Polish Statistics Office).

Poland’s economic fundamentals remain healthy despite the challenges posed by Russia’s invasion of Ukraine. GDP increased by 5.1% in 2022 following an increase of 6.9% in 2021. Domestic demand and investment were the main drivers of economic growth in 2022 (increasing by 5.1% and 5% respectively compared to 2021. Private consumption grew by 3.3% in 2022 compared to 2021 (source: Polish Statistics Office). The European Commission predicts that Poland’s GDP growth will slow to 0.7% in 2023 before rebounding to 2.7% in 2024 as inflationary pressures gradually subside and financing conditions improve.

The unemployment rate is predicted to remain stable given that labour shortages are making firms reluctant to lay off workers. It is expected to increase only marginally to 3.3% in 2023, before gradually declining again to 3.2% in 2024. Wages are expected to continue growing at a fast pace, fuelled by the low unemployment rate and recent increases to the minimum wage, resulting in positive real wage growth in both 2023 and 2024. Inflation is expected to remain high after peaking in early 2023. Energy price inflation is set to continue its downward trajectory during 2023, supported by strong base effects and declining commodity prices (source: European Commission).

In 2022, the general government deficit amounted to 3.7% of GDP (due partly to the cost of measures related to the energy crisis, support for Ukrainian refugees and the adverse impact of a previous personal income tax reform). It is expected to increase to 5.0% of GDP in 2023 due to the continuation of energy support measures such as the price freeze schemes for electricity and gas (source: European Commission). Public sector wages and the value of government purchases are expected to grow on the back of high inflation. The government has also committed to raise spending on healthcare and on defence. And the extraordinary support of PLN10bn pledged to help Polish farmers deal with a glut of Ukrainian grain imports is set to further increase the deficit in 2023.

In 2024, Poland’s budget deficit is forecast to remain above 3% of GDP. Adjustments related to the timing of payments and deliveries of military investments are set to increase the public debt ratio, which is projected to reach 53% of GDP by 2024 (source: European Commission).

According to UNCTAD’s 2022 World Investment Report, FDI inflows to Poland increased significantly in 2021, reaching USD 24.8 billion, compared to the USD 13.8 billion recorded in 2020. Key foreign investors in 2021 included the Netherlands, Germany, Luxembourg, and France. According to National Bank of Poland data, in cumulative terms at the end of 2021, the UK was the eighth largest investor in Poland (£7.5bn GBP).

EY ranked Poland as eighth in Europe in terms of FDI attractiveness in 2022. EY notes that one of most striking features of the 2022 data is the growth of FDI projects in several Southern, Central and Eastern European states, including by 23% in Poland. According to EY, this is at least in part due to the reconfiguration of global supply chains and an inclination toward cost-competitive European locations for manufacturing and back-office operations.

Companies wanting to enter the market note the following factors:

• Around 2 hours from the UK by plane;
• Significant opportunities for UK companies in a number of key sectors such as infrastructure, defence and security, financial services and automotive;
• Poland was the largest beneficiary of EU funds in the last MFF (over EUR 105.8 billion in 2014 to 2020) and remains the largest beneficiary of EU cohesion funds in current MFF (2021-2027);
• Largest consumer market among the faster-growing Central European countries of the EU (source: World Bank), presenting potential for regional expansion;
• Seven high-growth agglomerations (Warsaw, Poznan, Wroclaw, Krakow, Gdansk/Tri-City, Katowice/Upper Silesia, Lodz);
• Greatly improved transport infrastructure since 2010, with hundreds of kilometres of new motorways, faster inter-city trains and better logistics;
• Some concerns about the capacity of the judiciary as well as questions over independence, with business disputes often taking years to conclude.

4. Business and human rights

Poland has ratified 91 ILO conventions including the eight fundamental conventions. Domestic labour law is compliant with EU regulations, including those on anti-discrimination. Poland has developed a network of labour inspectorates. Trade unions are legal, and employees are allowed to strike but only under the conditions set out in relevant domestic legal acts.

The Polish Investment and Trade Agency (in English) covers a wide range of economic and business areas, including information on doing business in Poland, economic statistics, trends, foreign trade details, inter-EU trade and a breakdown by industry and sector.

Poland is currently ranked as a Tier 2 country in the Trafficking in Persons (TIP) report - defined as not fully complying with all of the minimum standards of Victims of Trafficking and Violence Protection Act 2000, but making significant efforts to achieve compliance with those standards. Poland has a published National Action Plan, 2022-2024 to combat the problems of human trafficking and labour exploitation. Poland is one of the main source countries for revealed victims of labour exploitation in the UK. This issue is being addressed both by Poland and the UK.

Poland does not allow or recognise civil partnerships or same sex marriages and is ranked as the worst country for LGBT people in the EU according to ILGA-Europe. In 2020, the Polish Constitutional Tribunal further tightened already highly restricted access to abortion, permitting it only in cases of rape, incest, or where the pregnancy threatens the mother’s life.

5. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Poland’s strides in combating corruption in recent years have been through a combination of law enforcement action and political will. The Polish Anti-Corruption Bureau has been set up and reports of corruption are now far less common. Public willingness to confront the problem has also led to a reduction in opportunities for corruption. The law gives the person in receipt of a bribe immunity from prosecution if they report it to the authorities and assist in the prosecution of the bribe giver.

However, after several successive years in which Poland’s score and ranking improved in Transparency International’s Corruption Perception Index (CPI), the country’s score decreased from 58 Points in 2019 to 55 points in 2022, with Poland ranked 45 out of 180 countries in the Index. This has come in particular from Polish government measures which have been broadly criticised for weakening judicial independence, introducing undue political influence into the disciplinary regime for judges.

Visit the Business Anti-Corruption portal providing advice and guidance about corruption in Poland and some basic effective procedures you can establish to protect your company from them.

Read the information provided on our bribery and corruption page.

6. Terrorism

Attacks in Poland can’t be ruled out.

UK Counter Terrorism Policing has information and advice on staying safe abroad and what to do in the event of a terrorist attack. Find out how to reduce your risk from terrorism while abroad.

You should be aware of the global risk of indiscriminate terrorist attacks which could be in public places, including in places visited by foreigners.

There is a high threat of terrorist attack globally affecting UK interests and British nationals, including from groups and individuals who view the UK and British nationals as targets. You should remain vigilant at all times.

7. Protective security / organised crime

Most visitors to Poland experience no difficulties. Read the information provided on our Travel Advice safety and security page.

Caution should also be taken in securing premises where goods of value are stored. Businesses in Poland make extensive use of security guards, in such cases, a reputable company should be used.

Levels of organised crime in Poland remain low and most businesses will be unaffected. Corruption, fraud, and theft do exist, though Poland benefits from a robust Anti-Corruption Bureau and a professional and capable police force. Organised crime groups also engage in smuggling of commodities, illicit goods and people trafficking. Tobacco and alcohol are some of the most commonly smuggled goods.

Read the information provided on our organised crime page.

8. Intellectual property

Poland adheres to all EU laws regarding copyright and intellectual property and the local branches of international watchdogs monitor breaches that may occur, including downloading of illegal software which mostly concerns the music/film industry. Nevertheless ‘piracy’ of intellectual property remains an important issue the Polish government needs to deal with. Poland has not signed the Agreement on a Unified Patent Court.

Read the information provided on our Intellectual Property page.

9. Contacts

Contact the Department for Business and Trade (DBT) team in the British Embassy Warsaw for more information and advice on opportunities for doing business in Poland.

10. Useful links

For the latest news, events and business opportunities follow British Embassy Warsaw on Twitter, LinkedIn and Facebook.