The climate-fiscal timebomb: Poland

08 March 2026

Fiscal outlook

Poland recorded a 6.5% deficit and a debt-to-GDP ratio of 55.1% in 2024. The European Commission opened an Excessive Debt Procedure against Poland in 2024, with the country’s public debt rising the second-fastest in the EU. On 21 January 2025, the Council of the European Union recommended that Poland should put an end to the excessive deficit situation by 2028.

Deficit measures the level of borrowing in a given year. Debt-to-GDP compares the total public debt to the size of the economy. Both are currently used to determine how much borrowing a member state is allowed to undertake. However, neither measure in itself determines a government’s capacity to sustain higher levels of public investment. Fiscal sustainability depends on growth, the multiplier effects of investment, interest rates, inflation, the structure of the economy and external risks such as climate change. NEF advocates moving away from strict numerical debt targets.

Rising climate costs

In Poland, air pollution causes over 40,000 premature deaths and millions of cases of illness each year. Between 2014 and 2020, the annual economic cost of air pollution was estimated at €60bn (13% of GDP), one of the highest in the EU. Meanwhile, the country is experiencing an increase in extreme weather events. The Vistula, Poland’s longest river, has reached a record low, also putting pressure on the country’s energy system. In 2024, Storm Boris, which was the heaviest rainfall ever recorded, caused nine deaths, destroyed over 200 bridges, and flooded thousands of homes. Overall, total losses amounted to PLN 13bn (€3bn). Currently, however, only 7% of losses from extreme weather are insured. Scientists say that deadly flooding events like these are twice as likely due to climate change. Yet the country spends less than half as much on climate protection as it does on fossil fuel subsidies.

What NEF’s modelling shows

Organisation for Economic Co-operation and Development (OECD) projections show Poland’s GDP declining by 11% by 2050 and 16% by 2070 under current policies. Our modelling shows the following:

Under current policies (BAU – business as usual), Poland’s debt is 68 pps higher than the climate-agnostic baseline in 2050 and 230 pps higher in 2070.

With early EU mitigation and sufficient adaptation spending, debt is 40 pps higher in 2050 and 80 pps in 2070.

Delayed EU investments and insufficient adaptation results in higher debt levels of 53 pps in 2050 and 109 pps in 2070.

EU early action combined with global cooperation results in equal debt levels to the climate-agnostic baseline in 2050 and 20 pps lower levels in 2070.

Progressive taxation, such as a wealth tax, combined with EU early action would increase debt by 5 pps in 2050 and by 7 pps in 2070 compared to the climate-agnostic baseline.