Few nations have taken better to democracy and capitalism than Poland, the political scientist Frank Fukuyama once observed. Step onto a national LOT airline flight to Warsaw and you’ll soon see why.

Critics say Irish airline Ryanair has figured out the capitalist endgame. But it’s positively egalitarian compared to LOT, which reserves half the plane’s toilets for the six people in first class. One of their deputy ministers and myself once found out about this particular facet of Polish capitalism the hard way as we queued for the peasant toilet for what felt like an hour.

Upon landing in Warsaw, a city seemingly permanently under construction, the remarkable rise of Poland is plain to see – reminiscent of the rise of Korea (which shares a love for pickled food, weapons and capitalism). And as Korea’s rapid rise changed the power dynamics of Southeast Asia, Poland’s is doing the same for Europe.

Three decades after ending its centuries of partition and subjugation, Poland grew its economy by 3.5% in 2025, continuing a trend of strong growth. Warsaw’s number of skyscrapers seems to outpace even that. Is Śródmieście, the city’s business district, on track to become Europe’s Gangnam? Incidentally, Poland and Korea share a long-standing friendship.

But while Seoul prizes its tasty Hanwoo cows, Poland’s charge evokes its bison herds – and is rocking Europe’s tenuous power balance.

The country’s economy is on track to overtake a stagnating Italy in less than three decades, going from decades of Soviet privation to the top of the EU GDP table in less than one lifespan (a lot of time for a human, very little time for an economy).

By 2035, its per-capita GDP is expected to surpass both France and Spain. And as readers of the LOT in-flight magazine Kaleidoscope (a monthly insight into the life of Polish elites) will know, Poland is on the cusp of entering the G20.

As it approaches GDP parity with the rest of Europe, Poland will likely become a net contributor to the EU budget in the second half of the 2030s. And it’s not just a financial force to be reckoned with; Poland fields what is considered the bloc’s most effective conventional army.

Much ink has been spilled about Europe’s eternal centre-periphery power dynamics, where the industrialised centre rules and the outskirts follow. But Poland is the real challenge to the EU’s stale Franco-German hegemony. Since joining the bloc, Warsaw’s share of the Union’s GDP has roughly doubled, while Germany’s increased by just some 30% (the power balance was also swung by the UK’s departure).

Forward thinkers in Berlin and Paris came up with the ‘Weimar triangle’ – a much-hyped three-way formation designed to harness Warsaw’s influence by prying it away from its natural allies, the recently rejuvenated Visegrad 4 formation that also features Czechia, Slovakia, and Hungary.

The V4 formation is arguably at its most influential yet. Their positions – anti the Green Deal and migration – became mainstream during Viktor Orbán’s reign, while their economies grew further.

As a coalition, Visegrad now commands 10% of EU GDP and 14% of the population. And with half of V4’s economy and population being Poland, Warsaw calls the shots, its political heft amplified in Brussels by the other three partners.

If Poland continues to grow at this prodigious rate, it could upend the EU’s power dynamics forever.

The spectre of stagnation

But it isn’t always sunny in Poland. Warsaw is squandering money at a rate that would have German finance ministers of old bite through a belt in anxiety. Its public expenditure is now 51% of GDP – up from 41% in 2019 – while revenues only went up to 44% of GDP, from 41%. The result is a persistent fiscal deficit that has raised concern in Brussels.

On top of which, Poland is running headfirst into a demographic wall. With a fertility rate of just 1, the country is heavily dependent on migration into its labour markets. There is also a housing crisis to complicate matters further: the cost of buying has risen 117%, while rents have risen 74% – double and treble (respectively) average increases across the EU since 2015.

Just 2.2% of the country’s GDP goes towards building new houses, half the EU average. Experts calculate that Poland lacks some 120,000 new homes each year. In total, just 402 dwellings are available to each 1000 people compared to the EU average of 514.

Even if Poles were to have more kids, there is no space to house them. “Housing conditions remain challenging, with high overcrowding rates,” the Commission notes.

The country needs a new growth engine. Much of GDP growth was an increase in total hours worked and the effects of integrating new technologies. But without more residents, there are only so many more hours that can be worked. In fact, this central figure for productivity is on course to fall 1.2% per year in the late 2040s.

After decades in the wilderness, can the Polish bison make it in the modern jungle?

Economy News Roundup

Eurozone outlook improves as US-Iran tensions cool. Euro area business activity contracted at a slower pace this month, new data has shown, as hopes rise that Tehran and Washington will strike a permanent deal to end the Iran war. The improvement was partly driven by an upswing in services activity, which remained in negative territory but where the tourism and leisure-related sectors showed “signs of recovering demand”. Read more.

Parliament backs digital euro. The European Parliament has approved its position on the digital euro, paving the way for a potential introduction of a pilot version of the cash-like payment scheme next year. Supporters argue the system is critical to reduce Europe’s reliance on US payment systems, particularly Visa and Mastercard. Like physical cash, the digital euro would be issued and backed by the European Central Bank. Read more.

Budget deal very difficult, Dombrovskis admits. Huge differences in national negotiating positions mean that clinching a deal on the EU’s next long-term budget “is not going to be easy”, said Valdis Dombrovskis, the European Commission’s economy chief. “I’d say our proposal is ambitious but realistic,” Dombrovskis said on Monday evening. Read more.

EU tax rules go up in smoke. The European Commission has proposed numerous changes to the EU’s taxation rules, in what Brussels described as its most sweeping attempt so far to slash red tape. “Europe needs simpler rules to deliver better results,” said Valdis Dombrovskis, EU commissioner for economy, adding that the measures “will radically improve clarity and legal certainty for businesses and tax administrations”. Read more.