To become fully aware of the benefits of EU membership, it is worth considering what a member country’s economy would look like if it had not joined. A Polish think tank has done just that, offering eurosceptics everywhere pause for thought.
In the grand tapestry of contemporary European politics, few threads have been as consistently knotted and frayed in recent years as the ongoing dispute between Poland and the European Union.
While social issues such as abortion and LGBT+ rights play a part, the tension—simmering like a pot of bigos on a hot stove—between the EU’s Court of Justice (CJEU) and Poland’s ruling Law and Justice party (PiS) has at its heart judicial reform, a battleground where the ideals of sovereignty and the rule of law clash.
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Poland’s government, under the banner of PiS, has been implementing sweeping changes to the country’s judicial system since 2015. These reforms, however, have been met with stern disapproval from the EU, which views them as a breach of the bloc’s democratic principles.
The most recent dressing down of the Warsaw government came in June, when the CJEU ruled 2019 changes to Poland’s judicial system breach EU law by endangering the independence of judges.
Poland itself has in recent weeks stated its firm opposition to changes in the way the EU processes and relocates asylum seekers after a decade that has seen record numbers of refugees arrive on the bloc’s borders. On July 7, Polish legislators agreed to hold a national referendum on the EU’s plan on the same day as parliamentary elections in autumn.
Despite these ongoing disputes between Warsaw and Brussels however, Poland has consistently expressed its desire to remain a member of the EU. It recognises the benefits of EU membership, including access to the single market, financial support, and security cooperation.
Most importantly, Poland’s economy is so closely integrated with the EU that leaving the bloc would have significant consequences.
Poland without the EU
Just how enormous these consequences would be has been revealed in a new report from the Polish Economic Institute (PEI), a think tank, which claims that Poland’s GDP per capita—based on purchasing power parity (PPP)—is currently around 31 per cent higher than if it had not joined the EU.
To assess the impact of Poland’s participation in the European single market, the PEI created a counterfactual scenario looking at Poland’s GDP growth if the country had not joined the EU. It found that in 2021, Poland’s GDP per capita at PPP was 78 per cent of the EU average, compared to 40 per cent in 1990 and 50 per cent in 2004—when the country became an EU member.
Without EU membership and participation in the single market, Poland’s GDP per capita at PPP would be 60 per cent of that in the EU, says the PEI.
“If it were not part of the single market, Poland’s GDP per capita in 2021 would be at its 2014 level; EU membership has therefore boosted it by nearly 1.5 percentage points per year,” says Marek Wąsiński, head of the world economy team at the PEI.
“This is a very tangible indicator that translates into wages, company incomes, state budget revenues and, consequently, a higher standard of living for Poles within the EU. Between 2004 and 2018 alone, the share of Polish GDP generated by demand in other EU countries increased from 15.6 per cent to 21.2 per cent.”
Driving Poland’s economic success has been trade with other EU member states, made possible by the single market: since it joined the EU exports have been responsible for two-thirds of its economic growth. In 2021, Poland exported 216 billion euros worth of goods to the EU, or 75 per cent of all exports.
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The single market ensures the free movement not only of goods, but also services. Unsurprisingly, the EU also accounts for the largest share of Polish exports and imports of services, though it is slightly lower—at 68 per cent—than that for trade in goods.
“In 2018, over 3.3 million jobs in the country resulted from demand for goods and services containing Polish added value in Poland. Currently, every fifth job in Poland depends on demand created in EU countries,” says Jan Strzelecki, a member of the world economy team at the PEI.
Poland’s success in exporting goods and services would not have been possible however without EU investment, the PEI report adds, pointing to the 211 billion euros in foreign direct investment that entered the country (to the end of 2021) from other EU members.
The single market has also given Poles access to jobs abroad. According to Statistics Poland, at the end of 2020, 1.3 million Poles were temporarily based in other EU member states. Remittances by these Poles working abroad amounted to 2.6 billion euros—most of this came from EU countries. “Economic emigration has improved Poland’s balance of payments,” the report suggests.
“The benefits that the Polish economy derives from participation in the European single market are not limited to direct subsidies or structural funds; they also include indirect benefits,” the report concludes. “To become aware of the scale of the changes, consider what the economy would look like if Poland had not joined the European single market.”
To do so provides even the most eurosceptic members of the current Polish government (and, indeed, eurosceptics everywhere) with much pause for thought.
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