Poland: Poland heads to elections with a fragmented Parliament in sight
The ruling Law and Justice (PiS) coalition leads the polls but will not obtain an absolute majority.
The pro-market Konfederacja party is likely to be kingmaker.
Broad economic policy stability can be expected.
Upcoming elections: On 15 October, the country will head to the polls to elect a new Parliament. If no coalition obtains an absolute majority, inter-party negotiations will follow. Polls show a significant lead for the coalition headed by the conservative PiS, representing the incumbent government led by Prime Minister Mateusz Morawiecki. The more centrist Civic Coalition (KO), led by former Prime Minister Donald Tusk, is polling at slightly below 30% versus PiS’s estimated 35–40%. That said, PiS is unlikely to secure enough seats to govern alone. This means that the right-wing Confederation Liberty and Independence (Konfederacja) party, which is polling at around 10%, could prove decisive.
The parties’ policies: PiS holds a traditionalist view of society and advocates for restrictive immigration policies. Due to rule-of-law disputes, the incumbent government has often been at loggerheads with EU institutions, which has resulted in the freezing of EU fund disbursements. In terms of economic policies, PiS combines support for pro-market policies with robust social spending, which has translated into a significant fiscal deficit in recent years. If re-elected, PiS has promised to raise pensions and increase fiscal handouts to families with children.
If PiS requires the support of Konfederacja in order to govern, this would further inflame tensions with the EU, given Konfederacja’s anti-EU rhetoric. The smaller right-wing party would likely also push for lower taxes and government spending, which would clash with PiS’ social spending pledges.
KO is a liberal, pro-European coalition that covers a broad political spectrum. If elected, KO would pursue closer cooperation with the European Union, which would reduce friction with the bloc and likely lead to the resumption of EU fund disbursements. Economically speaking, KO also supports pro-business policies and has pledged tax hikes for public sector workers and tax cuts for other workers and pensioners.
The economic upshot: The election is set to have a limited impact on the domestic economic policy landscape due to the Parliament’s fragmentation and a broad pro-business consensus. Social spending will likely remain elevated regardless of whether the country is governed by PiS or KO-led coalitions, with the country consequently set to run sizable fiscal deficits in the coming years. That said, policymaking could nonetheless be hampered by the lack of a clear parliamentary majority for either of the major political blocks. Moreover, relations with the EU would be significantly warmer under a KO-led coalition than with a PiS-run government.
Analysts at the EIU expect the elections to deliver a divided Parliament:
“Given our forecast that no political bloc will secure a majority, policymaking after October will be determined by the ability of the next government to guide bills through a closely divided parliament. However, given ideological differences and distrust between the Polish right and the (current) centre-left opposition, it is highly likely that the policy environment will be characterized paralysis.”
Moreover, they added:
“All the major parties are broadly pro-business and will keep Poland on a pro-market and pro-Western track. However, any PiS-led government will struggle to unlock EU funds unless it makes concerted progress in addressing the EU’s rule-of-law concerns.”