Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Poland
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Poland, budget policy, economic policy, economic recovery, economic reform, education policy, employment policy, energy policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 3.6.2026  COM(2026) 221 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Poland {SWD(2026) 221 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Poland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(2) and Article 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parliament and of the Council 
of  29 April 2024  on  the  effective  coordination  of  economic  policies  and  on  multilateral 
budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No  1466/97  (1),  and  in 
particular Article 3(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  preventing  excessive  government  deficits.  The  Regulation  stipulates  that  the 
Council  and  the  Commission  conduct  multilateral  surveillance  in  the  context  of  the 
European Semester in accordance with the objectives and requirements set out in the 
Treaty  on  Functioning  of  the  European  Union  (TFEU).  The  European  Semester 
includes, in particular, the formulation and the surveillance of the implementation, of 
country-specific recommendations.  

(2) 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (2). The proposal 

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Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29 April 2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council  Regulation 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the  European 
Fund  for  economic,  social  and  territorial  cohesion,  agriculture  and  rural,  fisheries  and  maritime, 
prosperity  and  security  for  the  period  2028-2034  and  amending  Regulation  (EU)  2023/955  and 

30 April 2024, 

(EC)  No 

2024/1263, 

1466/97 

(OJ 

L, 

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(3) 

(4) 

(5) 

(6) 

aims to increase the effectiveness of Union funding by reducing the fragmentation of 
the  financial  architecture  and  to  support  Member  States  in  the  coordination  of  their 
economic policy in line with Article 175 TFEU.  

On  25 November 2025,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2026  Alert  Mechanism Report,  in  which  it  did  not  identify 
Poland as one of the Member States for which an in-depth  review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the  economic  policy  of 
the  euro  area,  a  recommendation  for  a  Council 
recommendation on human capital in the European Union, and a proposal for the 2026 
Joint  Employment  Report,  which  analyses  the  implementation  of  the  Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights.  The  Council 
adopted  the  Recommendation  on  the  economic  policy  of  the  euro  area  (3)  on 
21 April 2026 and the Joint Employment Report and the Recommendation on human 
capital on 9 March 2026. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass, ensuring that EU Member States’ economic policies are consistent with the 
Commission’s  strategic  objectives,  creating  a  unified  approach 
to  economic 
governance that fosters sustainable growth, innovation and resilience across the Union. 

In  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  Recovery  and  Resilience  Facility  (RRF) 
implementation (4). Recovery and resilience plans (RRPs), along with cohesion policy 
funding, have been essential for delivering on the policy priorities under the European 
Semester, as the plans were required to effectively address all or a significant subset of 
challenges identified in the relevant country-specific recommendations issued in recent 
cycles, and programmes funded by the European cohesion policy were required to take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  the  RRF,  in  particular  those  that  contribute  to  addressing 
challenges identified in the country-specific recommendations. 

in 

addressing 

On  3 June 2026,  the  Commission  published  the  2026  country  report  for  Poland.  It 
assessed  Poland’s  progress 
country-specific 
recommendations and took stock of Poland’s implementation of the RRP. On the basis 
of  that  analysis,  the  country  report  identified  the  most  pressing  challenges  Poland  is 
facing.  It  also  assessed  Poland’s  progress  in  implementing  the  European  Pillar  of 
Social Rights and in achieving the Union headline targets on employment, skills and 
poverty  reduction,  as  well  as  progress  in  achieving  the  United  Nations  Sustainable 
Development Goals.  

relevant 

the 

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Regulation (EU, Euratom) 2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the 
subject of negotiations with the co-legislators. 
OJ C, C/2026/2434, 28 April 2026, ELI: http://data.europa.eu/eli/C/2026/2434/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
(OJ  L  57,  18.2.2021,  p.  17,  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj). 

the  Recovery  and  Resilience  Facility 

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(7) 

(8) 

(9) 

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10 

On  21 January 2025,  the  Council,  upon  the  assessment  and  recommendation  of  the 
Commission, adopted a Recommendation endorsing the national medium-term fiscal-
structural  plan  of  Poland  (5).  The  plan  covers  the  period  from  2025  until  2028  and 
presents  a  fiscal  adjustment  spread  over  four  years.  The  Council  recommended  the 
following  maximum  growth  rates  of  net  expenditure:  6.3%  in  2025,  4.4%  in  2026, 
4.0%  in  2027  and  3.5%  in  2028,  which  correspond  to  the  maximum  cumulative 
growth rates calculated by reference to the base year of 2023 of 19.6% in 2025, 24.9% 
in 2026, 29.9% in 2027 and 34.4% in 2028. For the years 2025-2028, these maximum 
growth rates of net expenditure coincide with the corrective path, as recommended by 
the Council under Article 126(7) TFEU on 21 January 2025, with a view to bringing 
an  end  to  the  situation  of  an  excessive  deficit  (6).  Based  on  the  Commission’s 
assessment on effective action of 3 June 2026 (7), the excessive deficit procedure for 
Poland is held in abeyance. 

from 

recommendation 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  has  invited  Member 
States  to  request  the  activation  of  the  national  escape  clause  of  the  Stability  and 
Growth Pact in a coordinated manner to support the EU efforts to achieve a rapid and 
significant  increase  in  defence  spending  (8)  and  this  proposal  was  welcomed  by  the 
European Council of 6 March 2025. Following the request of Poland, on 8 July 2025 
the  Commission,  adopted  a 
the  Council,  upon  a 
Recommendation  allowing  Poland  to  deviate  from  the  recommended  maximum 
growth  rates  of  net  expenditure  (9).  The  period  when  the  national  escape  clause  is 
activated  (2025-2028)  allows  Poland  to  reprioritise  government  expenditure  or 
increase  government  revenue  so  that  lastingly  higher  defence  expenditure  would  not 
endanger fiscal sustainability in the medium term.  
On  30 April 2026,  Poland  submitted  its  2026  Annual  Progress  Report  (10)  on 
adherence  to  the  recommended  maximum  growth  rates  of  net  expenditure  and  the 
implementation  of  reforms  and  investments  responding  to  the  main  challenges 
identified  in  the  European  Semester  country-specific  recommendations.  The  Annual 
Progress  Report  also  reflects  Poland’s  biannual  reporting  on  the  progress  made  in 
implementing  its  recovery  and  resilience  plan  in  accordance  with  Article  27  of 
Regulation  (EU)  2021/241.  The  report  on  action  taken  under  the  excessive  deficit 
procedure is integrated in the Annual Progress Report.  

Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of Poland (OJ C, C/2025/642, 10 February 2025, ELI: http://data.europa.eu/eli/C/2025/642/oj. 
Council  Recommendation  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  deficit  in 
Poland, adopted on 21 January 2025. All documents related to the excessive deficit procedure of Poland 
can  be  found  at:  https://economy-finance.ec.europa.eu/economic-governance-framework/stability-and-
growth-pact/corrective-arm-excessive-deficit-procedure/excessive-deficit-procedures-
overview/Poland_en. 
Communication from the Commission to the  European Parliament,  the Council, the European Central 
Bank,  the  European  Economic  and  Social  Committee,  the  Committee  of  Regions  and  the  European 
Investment Bank, 2026 European Semester – Spring Package, COM(2026)200 final.  
Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19 March 2025, C(2025)2000 final. 
Council Recommendation of 8 July 2025 allowing Poland to deviate from the maximum growth rate of 
net  expenditure  as  set  by  the  Council  under  Regulation  (EU)  2024/1263  (Activation  of  the  national 
escape clause), (OJ C, C/2025/3971, 20 August 2025, ELI: http://data.europa.eu/eli/C/2025/3971/oj. 
The  2026  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en. 

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(10)  Real  GDP  growth  in  2025  was  3.6%  and  HICP  inflation  stood  at  3.3%.  The 
Commission  Spring  2026  Forecast  projects  real  GDP  to  grow  by  3.5%  in  2026  and 
2.8% in 2027, and HICP inflation to stand at 3.6% in 2026 and 2.9% in 2027.  
(11)  Based  on  data  provided  by  Eurostat  (11),  Poland’s  general  government  deficit 
increased  from  6.4%  of  GDP  in  2024  to  7.3%  of  GDP  in  2025.  The  increase  in  the 
deficit  in  2025  mainly  reflects  higher  expenditure  on  military  equipment  deliveries, 
public sector wages and social benefits. Based on policy measures known by the cut-
off  date  of  the  forecast,  the  Commission  Spring  2026  Forecast  projects  a  deficit  of 
6.5% of GDP in 2026 and 6.3% of GDP in 2027. The decrease in 2026 mainly reflects 
restraints  on  nationally  financed  expenditure,  in  particular  on  compensation  of 
employees  and  investment,  and  new  discretionary  revenue-increasing  measures.  The 
decrease  of  the  deficit  in  2027  mainly  reflects  the  adopted  discretionary  revenue 
measures. 

(12)  Based  on  the  Commission’s  estimates,  the  fiscal  stance  (12),  which  includes  both 
nationally and EU financed expenditure, was expansionary, by 1.3% of GDP, in 2025. 
It  is  projected  to  be  expansionary,  by  0.3%  of  GDP  in  2026,  and  contractionary,  by 
1.7% of GDP, in 2027. 

(13)  Based on data provided by Eurostat (13), Poland’s general government debt increased 
from  54.8%  of  GDP  at  the  end  of  2024  to  59.7%  of  GDP  at  the  end  of  2025.  The 
increase  in  the  debt  ratio  in  2025  mainly  reflects  high  deficits  and  debt-increasing 
stock-flow  adjustments  related  to  defence  investments.  Based  on  policy  measures 
known  at  the  cut-off  date  of  the  forecast,  the  Commission  Spring  2026  Forecast 
projects the debt-to-GDP ratio to increase to 64.5% by the end of 2026 and to further 
increase to 68.3% by the end of 2027. The increase in 2026 and 2027 mainly reflects 
high deficits and debt-increasing stock-flow adjustments. 

(14)  Based  on  Eurostat  data  (14),  total  general  government  defence  expenditure  in  Poland 
amounted  to  3.4%  of  GDP  in  2025.  According  to  the  Commission  Spring  2026 
Forecast, it is projected at the same level in 2026. This corresponds to an increase of 
1.8 percentage points of GDP compared to the reference year 2021. 

(15)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 
markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient. Since the outbreak of the war in the Middle East in February 2026, Poland 
adopted  fiscal  policy  measures  to  mitigate  the  impact  of  high  energy  prices  on 
households  and  firms  (15).  These  include  untargeted  reductions  in  excise  duties  and 
VAT on fuels in force until 15 May 2026. According to the Commission Spring 2026 
forecast,  the  fiscal  cost  of  these  measures  is  projected  to  amount  to  approximately 

11 
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Eurostat-Euro Indicators, 22 April 2026. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat-Euro Indicators, 22 April 2026. 
Eurostat, government expenditure by classification of functions of government (COFOG). 
This reflects the situation at the cut-off date of the Commission’s Spring 2026 Forecast (4 May 2026). 

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0.1% of GDP in 2026. According to Commission estimates, if these measures were to 
remain  in  force  until  end-2026,  their  fiscal  cost  would  amount  to  0.4%  of  GDP  in 
2026. 

(16)  Based on the Commission’s calculations, net expenditure in Poland grew by 8.5% in 
2025  and  22.9%  cumulatively  over  2024  and  2025.  The  net  expenditure  growth  in 
2025 is above the recommended maximum growth rate, corresponding to a deviation 
of  0.9%  of  GDP  in  annual  terms.  When  considering  2024  and  2025  together,  the 
cumulative growth rate of net expenditure is also above the recommended maximum 
growth  rate,  corresponding  to  a  deviation  of  1.2%  of  GDP  in  cumulative  terms. 
However, the projected deviation is within the flexibility of the national escape clause, 
taking into account the increase in defence spending. 

(17)  Based  on  the  Commission’s  calculations,  net  expenditure  in  Poland  is  projected  to 
grow  by  4.0%  in  2026,  and  27.9%  cumulatively  over  2024,  2025  and  2026.  The 
projected  net  expenditure  growth  in  2026  is  below  the  recommended  maximum 
growth  rate.  When  considering  2024,  2025  and  2026  together,  the  projected 
cumulative  growth  rate  of  net  expenditure  is  above  the  recommended  maximum 
growth  rate,  corresponding  to  a  deviation  of  1.0%  of  GDP  in  cumulative  terms. 
However, the projected deviation is within the flexibility of the national escape clause 
based on current projections for defence spending. 

(18)  Public  expenditure  has  grown  rapidly  in  recent  years,  driven  by  multiple  policy 
priorities,  including  increased  spending  on  defence  and  social  policy.  In  2025,  it 
reached  50.9%  of  GDP,  above  the  EU  average  of  49.5%  of  GDP.  The  efficiency  of 
public  finances  remains  a  challenge  as  social  benefits  are  largely  untargeted  and  are 
not  means-tested  at  household  level,  resulting  in  a  welfare  system  with  limited 
redistributive power. Spending reviews carried out since 2024 had a limited impact in 
terms of spending reallocations. 

(19) 

In addition to a rationalisation of expenditure, revenue sources are needed to rebalance 
public finances and to keep public debt sustainable. Tax revenues as  a percentage of 
GDP  remain  considerably  below  the  EU  aggregate,  despite  a  gradual  increase 
observed  in  2024  and  2025.  Poland’s  tax  mix  is  characterised  by  a  relatively  low 
reliance on labour taxation, with personal income tax revenues significantly below the 
EU average, while consumption  and capital  taxes  account  for a higher  share of total 
revenue.  The  tax  base  could  be  broadened  to  include  new  sources  without  hindering 
economic growth. To mobilise additional revenues, stronger efforts are also needed to 
improve  tax  compliance.  While  the  compliance  gap  in  value  added  tax  (VAT)  has 
narrowed, it remains substantial. A high compliance gap is also estimated in corporate 
income tax. 

(20)  A declining trend is visible in the adequacy of pension benefits. The benefit ratio - the 
average pension to the average wage  - decreased from 66% in 2005 to 55% in 2024. 
According to estimates in the 2024 Ageing Report, limiting the further decline in the 
benefit  ratio  projected  at  unchanged  policy  would  involve  2.5  percentage  points  of 
GDP higher pension spending by 2045. This would put at risk the sustainability of the 
pension  system.  It  is  estimated  that  by  2040  half  of  the  pensioners  will  receive  a 
retirement  benefit  that  equals  the  statutory  minimum.  This  would  be  mostly  true  for 
women whose low labour market participation (48.3% versus 59.4% in the EU, aged 
55-64)  reflects  their  lower  statutory  retirement  age.  Furthermore,  self-employed 
persons who pay the minimum pension contributions and those on civil law contracts 
who  cover  the  pension  premium  under  the  minimal  threshold  are  also  at  risk  of 

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pension  poverty.  The  pension  system  is  also  characterised  by  a  high  fragmentation 
with costly special regimes for selected professions. KRUS, the largest special pension 
system, is dedicated to farmers, who represent over 10% of all pensioners and retirees 
in  Poland,  and  is  heavily  subsidised  from  the  state  budget  (around  0.7%  of  GDP  in 
2025).  The  social  contributions  from  large-scale  farmers  do  not  reflect  their  income 
levels,  which  affects  the  adequacy  of  pensions.  In  addition,  the  rules  governing 
pension entitlements in KRUS and the calculation of transfers of pension capital to the 
general pension system do not incentivise farmers, particularly those with significant 
contributory  periods  in  KRUS,  to  switch  to  the  general  scheme.  Other  professions, 
such  as  the  uniformed  services  or  judges  and  prosecutors,  receive  pensions  without 
paying contributions, therefore fully relying on the state budget subsidies. 

(21)  The systematic, meaningful and timely involvement of local and regional authorities, 
social partners, civil society and other relevant stakeholders remains essential in order 
to  ensure broad ownership  for the successful  implementation  of the Union’s funding 
instruments, as well as in the context of the European Semester. 

(22)  The implementation  of cohesion  policy programmes,  which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF), 
the  European  Social  Fund  Plus  (ESF+)  and  the  Cohesion  Fund  (CF)  in  Poland,  is 
above the average pace at EU level, both in terms of project selection and payments. It 
is important to keep current momentum, while maximising the impact of investments 
on the ground. Poland is already taking action under its cohesion policy programmes 
to  boost  competitiveness  and  growth.  Nevertheless,  some  areas  may  require  further 
strengthening  in  implementation,  including  those  relating  to  fossil  fuels  decoupling 
and  just  transition.  It  is  essential  to  ensure  that  the  new  investments  identified  by 
Poland in its mid-term review of the cohesion policy funds, notably those linked to the 
five priorities identified in the Mid-Term Review Regulation (16), are deployed rapidly 
and effectively. 

(23)  Poland  faces  several  challenges  related  to  simplification,  research  and  innovation, 
energy,  climate  and  water  management,  skills  and  education,  the  inclusion  of 
disadvantaged groups and segmentation of the labour market, and housing. 

(24)  While  having  a  generally  pro-competitive  regulatory  framework,  Poland  still  faces 
some  challenges  as  regards  legislative  complexity  and  of  ensuring  an  effective 
institutional  framework.  71%  of  businesses  consider  business  regulations  to  be  a 
barrier for their company when investing in Poland (17) and the costs that companies, 
particularly SMEs, face in complying with labour and tax systems are comparatively 
high.  According  to  the  EIB  Investment  Survey,  the  share  of  firms  in  Poland  that 
allocate  more  than  10%  of  their  staff  to  dealing  with  regulatory  requirements  fell 
significantly  (from  25%  in  2024  to  19%  in  2025)  but  remains  well  above  the  EU 
average  of  11%.  Moreover,  the  involvement  of  social  partners  in  the  legislative 
process  remains  limited,  and  stakeholders  report  ongoing  shortcomings  in  the 
functioning of the Social Dialogue Council. The public procurement system continues 
to suffer from the low number of companies submitting tenders, as well as lengthy and 
complex procedures.  Further strengthening the digitisation of the public procurement 

16 

17 

Regulation  (EU)  2025/1914  of  the  European  Parliament  and  of  the  Council  of  18 September 2025 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review. 
EIB Investment Survey 2025: Poland overview 

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process  and  planning  ahead,  including  communicating  long-term  procurement  plans, 
could help address the challenges. Regulatory and administrative barriers affect intra-
EEA  trade  in  goods  and  services,  with  national  packaging  and  waste  rules  creating 
compliance burdens. 

(25)  Despite  years  of  robust  economic  growth  and  improved  living  standards,  Poland 
continues  to  face  significant  developmental  disparities  both  between  and  within  its 
regions, including between urban and rural areas. Eastern Poland remains particularly 
disadvantaged,  with  GDP  per  capita  at  61.3%  of  the  EU  average  in  2024,  ranking 
among the poorest regions in the Union. The situation of the regions on EU’s external 
eastern  border  has  been  further  exacerbated  by  Russia’s  war  of  aggression  against 
Ukraine, heightening security concerns, economic uncertainty and reducing the appeal 
of these regions to both investors and residents. Many areas, particularly those outside 
major  metropolitan  centres  suffer  from  insufficient  administrative  capacity  and 
unequal access to essential public services, including education, healthcare, childcare, 
and transport, further diminishing their attractiveness. Innovation in eastern and north-
western  regions,  including  innovative  investment,  is  limited,  constraining  their 
productivity growth and availability of high-quality jobs. 

(26)  Poland’s  economic  growth  and  competitiveness  increasingly  rely  on  its  ability  to 
harness  the  potential  of  science  and  innovation.  Despite  steady  increases  in  business 
R&D  spending,  Poland’s  innovation  outcomes  remain  limited,  with  its  R&D 
performance  reaching  only  65.9%  of  the  EU  average  in  2025  –  an  improvement 
of 2.6 percentage  points  from  2024.  Cooperation  between  science  and  business  is 
limited, reducing Poland’s ability to commercialise its research. This issue is amplified 
by insufficient incentives for researchers to work with the industry, such as inadequate 
valuation of commercialisation results in the evaluation of scientific activity. Making 
research  careers  more  attractive  and  a  further  modernisation  of  scientific  institutions 
will  be  essential.  Efforts  to  boost  innovation  need  to  include  the  updating  and 
streamlining of smart specialisation strategies. Further developing an environment that 
supports technology transfer, building and scaling of startups, ensuring their access to 
stable  and  reliable  financing  are  among  the  key  steps  towards  achieving  a  high-
performing innovation ecosystem.  

(27)  Despite good progress,  challenges still pertain  in the digitalisation of public  services 
and  their  availability  for  citizens  and  businesses,  which  remains  below  the  EU 
average, in particular for citizens where Poland scores 71 compared to the EU average 
of  82.  The  limitations  in  interoperability,  data-sharing  between  government  systems 
and  the  once-only  principle  in  data  collection  undermine  the  user  experience  and 
narrow  the  potential  of  the  digitalisation  of  public  services  to  reduce  administrative 
burden,  while  sectors  such  as  justice  would  benefit  from  further  digitisation  to 
improve efficiency and  accessibility. Poland has not yet  fully harnessed cross-border 
data  exchange,  missing  opportunities  to  streamline  administrative  procedures, 
particularly through an increased use of structured data formats. 

(28)  Poland’s  digital  uptake  among  SMEs  remains  below  the  EU  average,  limiting 
productivity and innovation. While the share has increased, only 59% of Polish SMEs 
reached  a  basic  level  of  digital  intensity  in  2025  (compared  to  the  EU  average  of 
71.4%). The adoption of advanced technologies, such as AI, also lags behind, which 
could  hamper  future  growth.  Poland  would  benefit  from  further  stimulation  of 
investment  and  specialised  knowledge  support  in  digitalisation,  promoting  the 
adoption of advanced technologies and upskilling employees, as well as participation 
in EU-wide initiatives. 

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(29)  Poland’s  housing  market  has  in  recent  years  been  characterised  by  a  low  supply  of 
housing  and  a  decrease  in  affordability.  House  prices  and  rents  have  been  rapidly 
increasing since 2015, particularly in cities. Investment in housing remains the lowest 
in  the  EU,  while  housing  quality  and  conditions  remain  challenging,  with  high 
overcrowding rates. To address this, a wide range of measures is needed, with a focus 
on  supply-side  policies,  including  improving  regulations  of  the  housing  market  to 
increase  the  affordable  housing  supply,  improve  its  quality,  and  slow  down  housing 
prices’ inflation. 

(30)  Poland’s  housing  policies  are  fragmented.  Various  programmes  are  spread  across 
different  ministries  with  competing  priorities,  and  there  is  no  body  coordinating 
housing policy at the central  level.  There is  no centralised analysis  of housing needs 
and of the existing stock (including at the local level). To address this, Poland would 
need  to  introduce  housing  policy  coordination  at  the  central  level  and  between  the 
central and local administrations, and create a long-term housing strategy with a clear 
pathway  for  addressing  the  decreasing  affordability  and  availability  of  housing, 
improving housing quality, and implementing monitoring tools (alongside a multilevel 
data collection mechanism focusing for empty properties) to better identify and target 
the specific local housing stock and needs. 

(31)  Access  to  social,  municipal  and  affordable  housing  in  Poland  is  low,  and  vulnerable 
groups  face  specific  barriers  (including  discrimination  and  accessibility  constraints). 
The  large  housing  construction  gap  contributes  to  the  housing  shortage  and  limited 
access to housing for groups with specific needs. To increase housing supply, improve 
its quality and better target needs of specific groups, Poland would need to expand and 
modernise  its  social  and  affordable  rental  housing  system  and  programmes,  with  a 
stable, long-term strategy and financing for municipal housing programmes, introduce 
programmes for renovation and rehabilitation of vacant buildings into housing, expand 
the Social Rental Agencies, and develop  housing-led solutions  for vulnerable groups 
such as older people, persons with disabilities and homeless persons. 

(32)  Poland’s regulations related to the tenancy and construction laws and their application 
negatively  impact  housing supply and access  to  affordable housing. Legal  protection 
and  rights  in  the  rental  market  are  unbalanced,  as  the  current  legislation  does  not 
adequately  and  equally  protect  the  rights  of  neither  landlords  nor  tenants.  Landlords 
face prolonged and costly eviction procedures even when tenants break their tenancy 
agreements,  while  tenants  can  be  affected  by  long-term  rental  instability,  as  the  law 
does  not  regulate  rent  increases  in  a  clear  way  and  notice  periods  are  often  not 
respected.  A  more  balanced  approach  to  landlords’  rights  and  tenants’  security  and 
improving  the  enforcement  of  existing  legislation  would  facilitate  stable,  long-term 
renting. Regulatory procedures in the construction sector could also be improved for a 
faster and less costly construction of housing.  

(33)  Poland remains one of the few Member States to base the property tax on a very low 
maximum flat rate set out centrally by law, rather than on the value of a property. This 
creates  a  regressive  property  tax  regime  and  contributes  to  speculative  investment 
demand, as properties are taxed significantly less than riskier financial assets such as 
stocks, which increases property price inflation. This could be addressed by amending 
the  taxation  regime  towards  value-based  taxation  of  land  or  properties  (via  a  land 
value  tax  or  a  cadastral  property  tax),  which  would  improve  its  progressivity  and 
address incentives contributing to rapidly rising housing prices and low supply due to 
empty or underutilised properties or land. 

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(34)  Despite  recent  efforts,  grid  bottlenecks  are  still  slowing  the  pace  of  the  energy 
transition.  In  2025,  connection  requests  for  approximately  42  GW  of  renewable 
capacity were declined. This is above the total capacity installed in renewable sources 
in  Poland.  To  address  these  bottlenecks,  the  Transmission  System  Operator  aims  to 
prioritise investments in transmission networks, a north-south transmission as well as 
dedicated corridors to new capacities currently under development (both offshore and 
nuclear),  integration  of  transmission  and  distribution  networks  and  flexibility 
solutions. An additional effort is needed to improve the flexibility of the Polish energy 
system,  including  through  cross-border  electricity  trading,  to  avoid  curtailment  of 
renewable  energy  sources  and  mitigate  price  spikes  during  peak  hours.  The  current 
level  of  cross-border  interconnection  is  low,  with  the  Harmony  Link  with  Lithuania 
being  the  only  project  underway.  Capacity-allocation  constraints  have  systematically 
decoupled  Polish  electricity  prices  from  the  EU  market  and  are  now  contributing  to 
higher  prices.  While  the  use  of  allocation  constraints  is  seeing  some  decline,  the 
frequency  of  allocation  constraints  activation  is  concerning  as  it  ultimately  leads  to 
RES curtailment.  

(35)  Due  to  the  reliance  on  expensive  fossil  fuels  for  electricity  generation  and  a  lack  of 
non-fossil  flexibility  and  interconnectivity,  Poland’s  wholesale  electricity  prices 
averaged  the  ninth  highest  in  the  EU  in  2025,  limiting  energy  affordability.  Further 
deployment  of  renewable  energy  sources  faces  also  non-grid  related  constraints.  In 
retail  prices,  the  disproportionately  high  tax  burden  on  electricity  (compared  with 
natural  gas)  is  undermining  electrification  in  Poland,  both  of  industry  sectors  and 
households. Industrial consumers pay around three times more for electricity than for 
gas,  and  taxes  and  levies  account  for  a  third  of  their  electricity  bill.  In  the  heating 
sector, the tax burden on electricity is impeding heat pump deployment. Poland’s coal 
mining  sector  is  heavily  subsidised  and  consumes  budgetary  resources  that  could 
otherwise  be  used  to,  among  other,  accelerate  the  clean  energy  and  industrial 
transition.  Fossil-fuel  subsidies  that  neither  tackle  energy  poverty  in  a  targeted  way 
nor address genuine energy security concerns could be considered a phase-out priority.  

investments 

to  advance 

(36)  The industrial transformation lacks a coherent strategic and legislative framework that 
would  align  policy  incentives,  infrastructure  planning  and  financial  support  with 
objectives 
in  priority  sectors.  Key  decarbonisation 
interventions  -  electrification,  deployment  of  onsite  renewables,  uptake  of  green 
hydrogen and deployment of carbon capture, utilisation and storage - are implemented 
incrementally rather than structurally. The phasing-out of coal poses major economic 
and  social  challenges  for  the  regions  still  reliant  on  mining  and  emission-intensive 
industries. A coordinated approach to industrial transformation will be key to mitigate 
loss of competitiveness, while fostering innovation and growth in these regions. 

(37)  Both  district  and  individual  heating  remain  dependant  on  coal,  facing  structural 
decarbonisation  challenges.  Renewables  supply  only  21%  of  the  energy  used  for 
heating and cooling across all sectors. A shift from coal to gas-based cogeneration is 
underway in the district heating sector, but integration of renewable energy sources is 
lagging. Coal still accounts for 60% of the district heating mix, while deployment of 
renewable and low emission-based systems is limited to demonstration projects and a 
few  smaller  cities.  Decarbonisation  progress  hinges  on  accelerated  heat  source 
diversification and network modernisation as well as planning to tap into the potential 
of  waste  heat  use.  Around  15%  of  Polish  households  still  use  coal  for  individual 
heating - the highest absolute number in the EU, which is also reflected in one of the 
worst air quality levels in the EU. A comparable share of households is also estimated 

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to be at risk of energy poverty due to high energy costs and poor building efficiency. 
Further  efforts  to  reduce  reliance  on  coal  and  improve  energy  efficiency  are  key  to 
bringing  down  emissions  and  air  pollution.  Heating  and  cooling  account  for  81%  of 
residential energy consumption. 

(38)  The shift towards sustainable transport remains challenging in Poland, with emissions 
from road transport having nearly doubled in the last two decades. Uptake of electric 
vehicles  in  private  and  freight  transport  is  growing  slowly  due  to  insufficient 
incentives,  including  fiscal,  and  charging  infrastructure.  Support  and  coordination  of 
the development of zero-emission and intermodal public transport can further support 
decarbonisation efforts, while promoting better connectivity. 

(39)  Poland is  vulnerable to  high  risks of drought,  flood, heatwaves  and extreme weather 
events,  which  threaten  economic  security  and  people’s  wellbeing.  Poland  is  still 
lacking  an  updated  national  climate  adaptation  strategy,  informed  by  the  latest 
available  risk  assessment.  Work  to  update  the  strategy  adopted  in  2013  is  only 
expected  to  be  finalised  in  2027.  This  hinders  planning  of  adaptation  efforts  and 
coordination  between  local,  regional  and  national  authorities  when  it  comes  to 
addressing  the  acute  needs  of  strengthening  climate  resilience  and  preparedness. 
Climate change exacerbates environmental risks, and water resources and ecosystems 
are  particularly  vulnerable.  Unabated  water  pollution  from  industrial  activity 
combined  with  higher 
threatening 
freshwater  resources.  Protection  and  restoration  of  ecosystems  call  for  stronger 
incentives,  including  financial  ones  and  in  line  with  the  ‘polluter  pays’  principle,  to 
limit  pollution  and  promote  sustainable  use.  Natural  resources  are  also  a  factor  in 
climate mitigation, but carbon removals in Poland are not ambitious enough to meet its 
2030 target for land use, land-use change and forestry. Additional policies are needed 
to  foster  sustainable  wetland  and  peatland  agriculture  and  urban  settlements 
management. 

temperatures  remains  a  critical  challenge, 

(40) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States  take 
action  to  urgently  address  human  capital  related  structural  challenges  in  the  areas  of 
skills  and  education,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed  to  Poland  can  contribute  to  the  implementation  of  the 
Council Recommendation on human capital in the Union. 

(41)  Declining  basic  skills  and  increasing  inequalities  in  education  remain  a  challenge. 
Since  2018,  the  underachievement  among  15-year-olds  in  basic  skills  has  increased 
more than the EU average. Regional disparities remain both in relation to educational 
outcomes  and access  to  education.  Inclusive education poses  challenges,  with  a high 
proportion  of  students  with  special  educational  needs  in  segregated  settings.  To 
facilitate  transition  of  students  with  disabilities  to  mainstream  education,  Poland 
would  benefit  from  developing  an  inclusive  education  strategy,  strengthened  support 
services,  and  targeted  teacher  training.  Developing  a  long-term  strategic  approach  to 
inclusive  education  would  facilitate  stakeholder  engagement,  implementation  of 
comprehensive measures as well as widening the access to inclusive education for all 
students. In addition, insufficient green and digital skills continue to act as bottlenecks 
for the twin transitions. For instance, only half of the Polish population aged 16-74 had 
at least basic digital skills in 2025, below the EU average. Poland could benefit from a 
more  holistic  approach  to  addressing  skills  shortages  in  the  context  of  the  twin 
transitions as well as, more broadly, from closer monitoring and evaluation of reforms 
and investments in skills at all levels. 

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(42)  Poland still faces a persistently low enrolment and low share of graduates in science, 
technology,  engineering  and  mathematics  study  programmes  (STEM),  which  limits 
the  country’s  innovation  capacity.  A  more  integrated  approach  towards  STEM 
education 
to 
disadvantaged  groups)  would  also  be  beneficial  in  encouraging  students  (especially 
women) to pursue STEM careers. 

(including  better  career  awareness,  mentoring, 

reaching  out 

(43)  Equipping  teachers  with  the  necessary  skills  and  improving  the  quality  of  their 
education  remains  a  key  challenge  in  addressing  the  basic  skills  decline.  Teacher 
shortages  remain  and  may  deepen  as  the  challenges  in  attracting  and  retaining  new 
staff persist. Furthermore, the low share of lower-secondary school teachers under 30 
highlights  the  need  for  more  attractive  career  paths  for  teachers.  To  facilitate  a 
successful  implementation  of  the  curricula  reform  and  improve  career  prospects  of 
teachers,  Poland  would  need  to  ensure  a  sufficiently  staffed  teacher  workforce, 
modernisation  of  initial  teacher  education  and  sustained  investment  in  their 
professional development (including in the context of inclusive education). 

(44)  Concerns  about  the  relatively  low  effectiveness  of  the  vocational  education  and 
training (VET) system  remain, despite high  participation  rates. The employment rate 
of  recent  VET  graduates  has  declined  and  remains  below  EU  average.  The 
identification  of  the  root  causes  of  poorer  employment  outcomes  of  VET  graduates, 
namely  in  terms  of  low  basic  skills,  limited  labour-market  relevance  of  programmes 
and  skills  mismatches,  and  a  dedicated,  evidence-based  action  plan  to  address  them 
could  improve  the  situation  of  VET  graduates.  This  could  be  complemented  by 
measures to strengthen the quality of teaching (including addressing teacher shortages 
and  training  gaps),  better  align  curricula  with  labour  market  needs,  including  for 
digital  and  green  skills  and  to  strengthen  coordination  with  adult  learning  policies. 
Participation  in  adult  learning  is  still  significantly  below  EU  average,  especially  in 
non-formal learning,  with only  limited progress  achieved to  date.  Only a fifth  of the 
adult  population  participated  in  learning  in  2024,  far  below  the  EU  average  and  the 
2030  target.  The  adult  learning  system  remains  fragmented  due  to  dispersed 
governance  across  ministries  and  regional  actors,  as  well  as  a  strong  reliance  on 
project-based funding. This contributes to limited system coherence. The system could 
therefore benefit from stronger national-level coordination and funding. 

(45)  The  integration  of  disadvantaged  groups  into  the  labour  market  continues  to  pose 
challenges.  Disability  and  illness  remain  a  leading  driver  of  inactivity:  the  disability 
employment  gap  further  increased  from  33.9  percentage  points  in  2023  to  35.6 
percentage points in 2024. The labour force participation of persons with disabilities is 
just  above  50%.  Progress  has  been  made  on  regulating  and  improving  access  to 
childcare  services,  in  large  part  with  the  support  of  ESF+  and  RRF  funds,  but  the 
participation  of  women  in  the  labour  market  remains  low  and  affected  by  regional 
disparities.  Non-EU  workers  skills  remain  underused  in  the  labour  market.  In  2023, 
almost every second non-EU national worked below their qualification level, despite 
their high participation in the labour market. There is scope to continue the efforts on 
increasing the effectiveness of Public Employment Services to provide more targeted 
support to help integrate disadvantaged groups into the labour market. 

(46)  The  proportion  of  civil-law  contracts  in  total  employment  has  been  on  the  rise. 
Furthermore, self-employed individuals who do not hire staff account for a significant 
share  of  total  employment,  surpassing  the  EU  average.  Both  groups  are  not  fully 
covered  by  social  protection,  as  sickness  insurance  is  voluntary  and  there  are  legal 
provisions that allow for reduced social security premiums, which can have a negative 

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impact on future benefits, including pensions. This results in tax arbitration (taxes and 
social  security  contributions)  across  different  contract  types,  with  the  tax  wedge 
increasing with income. While the rate of collective bargaining is the lowest in the EU, 
it  is  more  commonly  used  at  the  company  level  than  at  the  sectoral  level,  which 
overall weakens the negotiating position of workers and self-employed. 

(47)  Long-term  care  services  are  not  prepared  to  meet  growing  demographic  challenges. 
Public expenditure on long-term care remains low and largely allocated to residential 
care (significantly above the EU average), whereas programmes aimed at developing 
homecare  or  community-based  care  remain  underfunded  or  highly  dependent  on  EU 
funding.  This  translates  in  high  out-of-pocket  costs  for  people  in  need  and  a  high 
reliance  on  informal  care  for  home-based  services.  Poland  would  benefit  from 
improving  the  quality  of  and  access  to  long-term  care  services,  particularly  of 
homecare and community-based care, including by increasing related financing and its 
sustainability. 

HEREBY RECOMMENDS that Poland take action in 2026 and 2027 to:  

1. 

2. 

3. 

Continue adhering to the maximum growth rates of net expenditure recommended by 
the Council on 21 January 2025, with a view to bringing an end to the situation of an 
excessive deficit, while making use of the flexibility under the national escape clause 
for  higher  defence  expenditure.  Reinforce  defence  spending  and  readiness  while 
ensuring  spending  efficiency  and  gradually  adapting  the  budget  to  sustain 
structurally higher defence spending. Ensure that any measures taken to mitigate the 
impact of the hike in energy prices are temporary, targeted at protecting vulnerable 
households or at addressing the needs of energy-intensive firms, preserve incentives 
for  energy  savings  while  ensuring  that  their  fiscal  cost  is  compatible  with  the 
commitments  under  the  EU  fiscal  framework.  Improve  the  efficiency  of  public 
spending,  including  through  better  targeting  of  social  benefits  and  extending  the 
coverage  of  spending  reviews.  Broaden  general  government  revenue  including  by 
increasing  the  role  of  sources  less  detrimental  to  growth  and  improving  tax 
compliance. Improve the adequacy of the pension system, while preserving the long-
term  sustainability  through  increasing  the  effective  retirement  age,  addressing  the 
pension  poverty  of  women  and  self-employed  and  reforming  the  special  pension 
schemes. 

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes  building,  where  appropriate,  on  the  reallocation  to  strategic  priorities 
and flexibilities in the mid-term  review  of the cohesion  policy framework. Address 
the  unique  socio-economic,  security  and  civil  preparedness  challenges  particularly 
affecting regions on the EU's external eastern border. 

Simplify  regulation,  improve  regulatory  tools  and  ensure  the  legal  framework  is 
stable  and  clear.  Encourage  competition  in  public  procurement  processes,  making 
them more efficient and less cumbersome, and ensure long-term planning of public 
procurement.  Strengthen  science-business  links  by  creating  stronger  incentives  for 
commercialisation of research and building an efficient pipeline of investment-ready 
projects.  Modernise  the  public  research  system,  make  research  careers  more 
attractive and ensure sustainable R&I funding. Make the business environment more 
innovation-friendly, 
territorial 
disparities in particular through greater  access to and quality of public services and 
infrastructure as well as in research and innovation. Build up administrative capacity 

including  for  start-ups  and  scale-ups.  Reduce 

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4. 

5. 

and improve efficiency by leveraging e-services interoperability and once-only data 
collection  principle  for  digitalisation.  Increase  digital  intensity  of  SMEs,  while 
prioritising  support  for  advanced  technologies.  Increase  the  supply  and  quality  of 
affordable  and  social  housing  through  efficient  housing  policy  coordination  and 
strategies,  expanded  affordable  and  social  housing  programmes, 
improved 
regulations, and revised property taxation. 

Boost  flexibility  and  grid  capacity  of  the  energy  system,  increase  cross-border 
interconnections  and  electricity 
trading,  and  remove  constraints  on  further 
deployment of renewable energy sources. Promote balanced electricity price signals 
to  incentivise  electrification  and  phase  out  fossil  fuel  subsidies,  especially  those 
related to coal mining. Enable clean industrial transformation and foster innovation-
oriented  transition  strategies  for  coal-dependent  regions.  Reduce  reliance  on  fossil 
fuels in the heating sector coupled with thermal modernisation of buildings. Promote 
decarbonisation  of  transport  along  with  the  enabling  infrastructure.  Build  climate 
resilience  through  functional  adaptation  governance,  ecosystem  restoration  and 
sustainable use of natural resources. 

Foster quality and inclusive education and address labour and skills shortages.  Step 
up  participation  in  STEM  fields  in  higher  education  and  address  teacher  shortages 
and  the  quality  of  teacher  education.  Further  strengthen  the  effectiveness  of 
vocational  education  and  training.  Facilitate  and  increase  adult  participation  in 
learning.  Increase  the  participation  of  disadvantaged  groups  in  the  labour  market, 
particularly  of  persons  with  disabilities,  including  by  providing  tailored  labour 
market  support.  Reduce  labour  market  segmentation  in  consultation  with  social 
partners by addressing tax arbitrage between types of contracts and improve access 
to social protection. Increase access and quality of long-term care services. 

Done at Brussels, 

For the Council 
The President  

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