A near-record deficit
Last week, Statistics Poland (GUS) reported that the general government deficit reached 7.2% of GDP in 2025. This is once again higher than forecast by the Ministry of Finance in the budget act (6.9% of GDP) and 1.7 percentage points above the path set out in the autumn 2024 fiscal-structural plan. The deviation from the planned trajectory is permitted under the EU’s general escape clause. A deficit of this magnitude was matched or exceeded only in 2009–2010.
Poland compared with its EU peers
Eurostat will publish full data on April 22. However, 14 national statistical offices, including Poland’s, have already released preliminary figures.
Among the countries that have reported so far, Poland has the highest deficit. It is likely to be overtaken by Romania, for which only cash-basis budget data are currently available – methodologically different from the EU standard. These figures suggest some reduction in the deficit, but it remains high at 7.6% of GDP.
Three points stand out. First, Germany pursued a broadly neutral fiscal stance in 2025 – the deficit did not increase compared with 2024. Fiscal loosening is expected to become more pronounced in 2026–27. Second, France managed to reduce its deficit from 5.8% of GDP to 5.1%, despite a difficult domestic political environment. Many analysts doubted this would be possible. As a result, France is likely to disappear from the radar screens of financial markets searching for the euro area’s weakest link. Third, among countries with deficits above 3% of GDP in 2024, all – except Poland – managed to reduce them. This includes Hungary, despite elections the elections that took place on 12 April.
Thin fiscal buffers
This divergence naturally carries risks, particularly in the face of unexpected shocks. One such shock is currently unfolding amid US and Israeli military action against Iran. The resulting rise in oil and gas prices has prompted many governments, including Poland’s, to introduce measures aimed at lowering fuel costs for consumers. These steps, however, come at a fiscal cost – one that some countries can more easily absorb than others. Poland is among those with significantly less room for maneuver.
According to Reuters, Italy’s minister for EU affairs has indicated that, if economic disruption linked to the conflict persists, the European Commission could once again suspend fiscal rules. In my view, it will be difficult to justify another broad activation of escape clauses while still claiming to preserve the stability of public finances. In a recent report, the European Fiscal Board noted that even the current defense-related clause already implies excessive fiscal consolidation for many countries, including – implicitly – Poland.
Deficits and growth in the short run
There is, however, another side to high deficits. Comparing changes in deficit levels over 2023–2025 with cumulative real GDP growth over the same period reveals a pattern: the more expansionary the fiscal stance, the stronger the economic growth. This relationship should be interpreted with caution, as it does not account for numerous other growth drivers, such as initial GDP per capita, the import intensity of public spending (particularly defense), or changes in labor supply driven by immigration.
Nonetheless, it is clear that Poland’s fiscal policy in 2024–25 has supported GDP growth, while households have simultaneously increased their savings rate. This is also reflected in the rise in the share of public consumption, from 18.9% of GDP in 2023 to 21.3% in 2025.
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