Trade, Innovation, and Productivity
On February 11, European Commission published its winter interim European economic forecasts. It shows that the EU real GDP is expected to grow by 3.7% and 3.9% in 2021 and 2022, respectively. The EU inflation rate is projected to increase slightly in 2021 – from 0.3% in 2020 to 1.4% - with a moderate decline to 1.3% by 2022. Member States, however, would experience different economic trends and speeds of recovery. For instance, the real GDP growth in Poland is expected to reach 3.1% in 2021 and 5.1% in 2022 with a 2.3% and 2.9% inflation rate in 2021 and 2022, respectively. The report suggests that the EU economy would reach the pre-pandemic level of production earlier than predicted in the earlier forecast as a result of a more substantial economic recovery in the second half of 2021 and 2022. Compared to the last forecasts, the report accounts for the recent developments of the epidemiological situation across Member States, launch of mass vaccination campaigns, and the effects of the Trade and Cooperation Agreement (TCA) reached between the European Commission and the United Kingdom on 24 December 2020.
Labour Market and Environment
In January 2021, the Ministry of Climate and Environment submitted the draft ‘Polish Hydrogen Strategy until 2030 with a perspective until 2040’ for public consultation. A document sets ambitious goals for the buildout of hydrogen technologies in Poland. It defines the goals and activities related to the development of national competences and technical infrastructure for building a low-emission hydrogen economy. They relate to the three sectors of hydrogen use – energy, transport, and industry as well as its production, distribution, and the necessary legal changes and financing. The publication of the draft Strategy is a positive signal as it gives hope that Poland will join other European countries at an early stage of creating new technological solutions and supply chains. It gives an opportunity to build national potential in a new industry and create jobs. The hydrogen strategy, however, has yet to be reflected in other governmental action plans on future priorities, thus one may wonder to what extent it will be incorporated in the ongoing green transition scheme.
Macro and Fiscal
On February 9, the European Parliament adopted the Recovery and Resilience Facility (RRF) Regulation, which paves the way for the Member States to officially submit their national recovery and resilience plans to access the funds under the RFF. The RRF with a total amount of EUR 672.5 billion is the main instrument of NextGenerationEU, a recovery plan to repair the economic and social damage caused by the Covid-19 pandemic where the disbursement of funds will be financed through borrowing on the markets. The RFF funds will be distributed in the form of loans (up to EUR 360 billion) and grants (up to EUR 312.5 billion). Spain and Italy have the largest access to the grants among the Member States with allocations of up to EUR 69.5 billion and EUR 68.9 billion in current prices, respectively. The largest grant amount that Poland could access under the RFF is EUR 23.9 billion in current prices. The member states can request a loan worth up to 6.8% of their 2019 Gross National Income under the RFF.