Poland downplays Brexit effect on EU funding

By bne IntelliNews June 27, 2016

The effect of a UK exit on EU funding earmarked for Poland would be “unimportant,” amounting to a maximum of €2bn during the 2014-2020 EU budget window, a government official claimed to local media on June 27.

The largest recipient, Poland is set to receive close to €105bn in EU cohesion and agricultural policy funding from the current budget. The shock “leave” result in the Brexit vote has provoked speculation that the potential departure of the third largest net contributor to the EU's finances will hurt the Central European member states in particular. The sharp fall in EU funds early in 2016, as the new window goes into operation, has only illustrated the vulnerability.

However, Warsaw insists it is confident that the Brexit process will take years, and thus not have any great impact on the 2014-20 window.  “[The EU] budget will have to reduced, including spending. However in the entire seven-year budget perspective, it is unimportant money, maybe €1bn-2bn,” the cabinet minister at the prime minister’s office, Wojciech Kowalczyk, told TV Republika.

“[Brexit] will take at least two years so it is obvious that before it happens the UK will pay its [share to the EU budget]. Once the UK is out of the EU, it will stop paying into the EU budget indeed, but also it will stop taking from it,” the official added. 

EU structural funds have been an important element in Poland’s growth for years. The funding for investment is estimated to have increased Polish GDP by around 1.7% a year, according to the European Commission. Financing in the new window - applications for projects became viable from the start of 2016 - is likely to add 4% to GDP through to 2020.

Indeed, the role of EU funding in the Polish economy was illustrated to stark effect in the first quarter. GDP contracted 0.1% q/q in January-March, the slowdown significantly driven by a 1.8% drop in investment on the year, the first contraction in seven quarters. Statisitic office GUS noted the effect of EU-driven investment that is not yet up to speed.

 

Related Articles

Glass wool production restarts in Hungary after 16-year hiatus

Glass wool manufacturing has resumed in Hungary after a 16-year break, as the first trial products rolled off the production line at a new thermal insulation plant built in northeastern Hungary ... more

Poland signs €200mn deal with ICEYE for reconnaissance satellites

Poland will acquire three synthetic aperture radar (SAR) satellites under a €200mn agreement with Polish-Finnish satellite operator ICEYE, the company said on May 14. The contract comes in the ... more

Erste Group buys 49% of Santander’s Polish unit for €6.8bn

Erste Group acquired a 49% stake in Santander’s Polish bank for approximately €6.8bn, the Austrian lender said on May 5. The Austrian bank, the country’s largest, also agreed to purchase 50% ... more

Dismiss