INTERNATIONAL POLICY ANALYSIS Austerity Policies in Europe: The Case of Poland Gavin Rae August 2012 n Poland has so far avoided austerity policies comparable to those conducted in South­ern Europe and some Eastern European EU-member states. The country has been the only EU member state not to have undergone a recession since the outbreak of the financial crisis. The raising of government spending – particularly through increased public investment – has meant that Polish society has been sheltered from some of the worst effects of the crisis. n Public debt has risen steadily over the past few years but its current level is still well below the EU average. The country still has considerable room for further fiscal expansion. As the Polish banking system did not undergo a crisis similar in scale to many other ECE countries, the government was not required to divert large sums of money to bail out its banking and financial sectors. n The government is increasingly coming into line with the accepted economic wis­dom in Europe that seeks deficit reduction through cutting public spending. This is likely to lead to an economic downturn and a deterioration of the government’s fi­nances. The problem facing the Polish economy is that the positive factors that were driving its economic growth in the past are now pointing downwards.