Assessing Overambitious Claims: Poland’s Path to Surpassing UK Wealth This Decade

May 22, 2024

Donald Tusk, Polish Prime Minister and ex-President of the European Council, made a splash recently when he promised that the Polish would be richer than the British by 2029 on social media.

This isn’t a new claim. Keir Starmer warned last year that Poland would overtake the UK economically by 2030 if growth trends continued. In fact, both men cited World Bank forecasts as the source of their claims.

It is easy to see why this seems like a very real prospect. Poland is already 20th in the world in terms of GDP per capita and has seen the fastest expansion in Europe since becoming a democracy in 1989. Growth was trending at around 5% a year before the pandemic, and the economy managed to grow by 10% between 2019 and 2022 despite the impacts of COVID-19.

There are several reasons for Poland’s success. Donald Tusk pointed to the role of EU membership, which is part of the story. Even before this, the formation of the Republic of Poland as a new post-Communist state looking to liberalise, embedded a deeply pro-growth approach, which has remained to some degree. A key driver has been low labour costs, which have driven FDI into the country from elsewhere in Europe and the relatively high mobility of Polish workers.

Meanwhile, the UK has been in a state of economic malaise. Despite the strong rate seen in Q1 2024, growth has gradually trended down to a crawl over the past thirty years or so, caused largely by weak productivity growth. The UK has also struggled with particularly strong inflation in recent years due partly to an overreliance on imported gas. In 2022, the economy was only 1.7% larger than in 2019.

However, there remains a large gap between the two countries economically. Polish GDP per capita remains less than half that of the UK as of 2023, according to Cebr’s World Economic League Table (WELT). Therefore, it would take an unrealistic growth rate for Poland to catch up to the UK by 2029, even if the UK were to remain stagnant in that timeframe.

Given that Tusk’s comment was particularly focused on the wealth of Poles vs Brits rather than output, a better measure to compare the two countries would be Gross National Income per capita, based on purchasing power parity (PPP). This also accounts for monetary flows between countries, an important factor to consider given the number of Polish workers abroad who send remittances. It also accounts for the lower cost of living in Poland compared to the UK.

On this measure, the gap between the countries is lower but still substantial. According to the World Bank, Poland had a GNI per capita based on PPP of around $42,000 in 2022, compared to around $55,000 in the UK, according to the Cebr WELT (when adjusted for updated population figures). This difference does seem more surmountable by 2029, especially considering that Poland has closed the gap by around £3,000 since 2019.

However, the divergence in economic growth rates between the two countries should ease over the next years. Cebr expects the UK economy to expand by an average of 1.7% between 2025 and 2029, with the most recent Bank of England forecasts showing an upward revision to align more closely with our own. This by no means represents rapid growth but a return to broadly pre-pandemic rates.

Poland, meanwhile, will likely see a slowdown in growth over the next few years, with growth over the same period averaging 3.2%. This is a relatively slight slowdown, but likely enough to mean Tusk will have broken his promise to the Polish people.

The slowdown in growth for Poland will be driven by a number of structural factors, many of which are shared with the UK. Their population is declining and ageing. This is driven by a low birth rate, and a net migration figure which is easing but remains negative, as more workers continue to leave Poland than look to return. They also face a tight labour market and low productivity, unaided by a belief that labour costs will remain relatively low, which holds back investment[1].

The gap in relative wealth between the two countries will nonetheless continue to shrink, and unless the UK can sort out its own economic woes, it won’t be too long before Poles do indeed feel better off than Brits.

Using the GNI per capita based on PPP metric, the Cebr WELT forecasts Poland will overtake the UK in 2035. Regardless of what metric or assumption you use, the overtake is likely to have happened by 2040. In that time, they will have likely already overtaken Italy and France and will be on the way to overtaking Germany.

There is also a scenario where Poland is able to unlock an even better path for growth over the next decade. If the economic gap between Poland and other European countries can close sufficiently to attract more foreign workers or Polish workers back, then it could significantly ease labour market and fiscal pressures. A combination of government intervention and the tight labour market could also help to change the business culture towards productivity improvements.

Despite the likely broken promise from the Polish Prime Minister, the sentiment rings true. Poland has been quietly developing into one of Europe’s stronger economies over recent decades and has the potential to become one of its powerhouses over the decade to come.