On 22 June 2026, the Council of the European Union adopted a recommendation setting binding net expenditure growth limits for Poland: 4.4% in 2026, 4.0% in 2027, and 3.5% in 2028, with cumulative growth from a 2023 base of 24.9% by 2026, 29.9% by 2027, and 34.4% by 2028. The recommendation, part of the European Semester, also urges Poland to implement structural reforms and investments to address challenges in fiscal sustainability, competitiveness, and social inclusion.
The recommendation builds on earlier steps in the EU's fiscal surveillance framework. On 21 January 2025, the Council endorsed Poland's national medium-term fiscal-structural plan covering 2025-2028. On 8 July 2025, it allowed Poland to deviate from recommended net expenditure growth rates under the national escape clause, citing defence spending. The excessive deficit procedure for Poland was held in abeyance as of 3 June 2026, the same day the Commission published its 2026 country report for Poland.
the general government deficit rose from 6.4% of GDP in 2024 to 7.3% in 2025, projected at 6.5% in 2026 and 6.3% in 2027. Government debt increased from 54.8% of GDP in 2024 to 59.7% in 2025, projected to reach 68.3% by end-2027. Defence expenditure stood at 3.4% of GDP in 2025, up 1.8 percentage points from 2021, and is projected to remain at that level in 2026. Net expenditure grew 8.5% in 2025 (22.9% cumulatively over 2024-2025), above the recommended maximum but within the escape clause flexibility due to defence.
The Council identifies several structural challenges. Eastern Poland's GDP per capita was 61.3% of the EU average in 2024. The benefit ratio (average pension to average wage) fell from 66% in 2005 to 55% in 2024. Women's labour market participation (aged 55-64) was 48.3%, below the EU average of 59.4%. The farmers' pension system (KRUS) was subsidised by around 0.7% of GDP in 2025. Untargeted reductions in excise duties and VAT on fuels were in force until 15 May 2026, with a fiscal cost projected at 0.1% of GDP in 2026 (0.4% if extended to end-2026). The share of firms allocating over 10% of staff to regulatory requirements fell from 25% in 2024 to 19% in 2025, still above the EU average of 11%.
Polish taxpayers face continued fiscal consolidation, with limits on expenditure growth potentially constraining public services and social benefits. Polish businesses may benefit from reforms to reduce regulatory burden and improve competitiveness, but could face higher taxes if the government seeks to meet deficit targets. Polish pensioners are indirectly affected by the declining benefit ratio, though the recommendation calls for pension system sustainability. EU institutions and other member states gain assurance that Poland is adhering to fiscal rules, supporting overall euro area stability.
Poland must report on progress in its next Annual Progress Report, due by 30 April 2027. The Commission will monitor compliance with the net expenditure path and may recommend further steps if deviations occur. The Council's recommendation is non-binding but carries political weight within the European Semester.