No time to crack open the bottle of champagne yet!

In 2009, Poland, alone of all the EU and most of the industrialised world, managed to register an increase in GDP of 1.7 %. In addition, it is projecting further economic growth this year of 2 % or more. Furthermore at a time when many countries, in particular, Greece, have come under scrutiny for their level of indebtedness, Poland looks on the face of it to be safe - the "P" in the grouping of "PIGS" - those falling under chilly gaze of speculators, hedge funds and "Gnomes of Zurich" (relocating from London to enjoy a more favourable tax regime), is filled by Portugal not Poland - the others being Ireland, Greece and Spain. Poland`s current debt as a share of GDP is just 50.5 %. That is comfortably midrange - Spain is a little lower at 49.7% but that country has a raft of problems such as 19 % unemployment and other sundry problems, while Greece`s is 113.2 %. Just to round off the comparisons - the average of the EU 25 is 72.3% while the UK`s is 63.4%.

So far, so good and I think it would be churlish to deny the government a little pat on the back for not allowing the economy to "boom and bust" as others have. Poland`s Minister of Finance was in fine fettle earlier this week, as demonstrated by his interview for the "FT". He couldn`t, of course, pass up the opportunity of reminding others in the EU "to get their finances in order" and "buck up and cut out the fiscal stimuli and other "voodoo economics". But, as so often seen in life, such hubris can be followed by nemesis, although whether this a quick one-step or a more prolonged drawn out affair, only time will tell. For one statistic not so well known may give all of us some pause for thought.

According to data prepared by Jagadeesh Gokhale of the Cato Institute, the current and future pension obligations of Poland amount to an eyewatering 1,550.4% of GDP! Greece`s own figure is 875.2 % and the EU 25 average is 434.2%. The UK`s is 442.1%. Poland`s nearest rival is Slovakia with 1,149.1%. In other words, Poland is in a class of its own but not one many other countries would wish to imitate. On another level, it also suggests that looking alone at government debt, everyone may be missing the real threat to our future, and to our children and grandchildren`s standard of living - the cost to support us as we all retire.
Poland`s problem has been exacerbated by the relaxed treatment provided to people in the 1980s and 1990s in terms of taking early retirement and a full pension - a disguised form of unemployment not reflected in the then already reasonably high figures. Starting in January of this year, the Government started to reduce the pensions of tens of thousands of functionaries of the former regime by around a half. It has been reported that some were receiving pensions of around EUR 2,000 per month. One might say in passing that the government presented this as a delayed form of justice for those who were part of an illegal regime who declared martial law and cracked down on Solidarity etc etc although one suspects that economic motives were more than likely prominent in the decision.
Poland may yet still need to consider other drastic courses of action - a further increase in the pensionable age, reduced benefits etc if Poland is to escape the fate of "Greece on the Baltic"...