Local goverments and companies across Poland are starting to capitalize on declining electricity prices, with a notable success story emerging from a purchasing group in Gdańsk. This collective, comprising the city, municipal enterprises, cultural and sports institutions, and over 20 nearby municipalities and counties, secured a 2025 electricity deal at PLN 461 (€100) per megawatt-hour. This represents a one-third reduction compared to the current frozen rate of PLN 698 (€151) set for small and medium-sized businesses (SMEs) and municipalities. The supplier, Energa Obrót, won the tender with its competitive pricing.
While the government-imposed price freeze remains in effect until March 2025, Gdańsk’s example underscores the potential for significant savings through active market engagement. The frozen rate is now serving more as a ceiling than a baseline, with many 2025 contracts already being negotiated well below this threshold.
Favorable market trends lower electricity costs
The decline in electricity prices is part of a broader trend across European energy markets. Costs for coal, natural gas and carbon emission allowances have dropped considerably compared to previous years. In Poland, the increasing reliance on renewable energy sources—often cheaper than coal—is further driving down production costs.
In November, contracts for 2024 on the Polish Power Exchange averaged €94 per megawatt-hour, a significant reduction from €118 just a year earlier.
For households, energy costs remain tied to tariffs set by the Energy Regulatory Office (URE), which are heavily influenced by wholesale market trends. While the current freeze keeps prices at €108 per megawatt-hour until September 2025, lifting the freeze under existing tariffs would lead to a 20% increase. The government’s strategy hinges on further wholesale price reductions in the coming months. By late 2025, it aims to unfreeze household electricity prices without imposing financial strain, aligning tariffs more closely with declining market rates.
The delicate balance between energy policy and market forces presents unique challenges for households. Unlike businesses and local governments, which are already benefiting from proactive negotiations, households remain dependent on policy decisions and the pace of market adjustments. As tariff updates approach in mid-2025, clarity will be key to ensuring that households can also share in the benefits of falling electricity prices.
Policy and market shifts shape energy pricing
The evolving energy landscape in Poland is influencing both policy and pricing strategies. The government’s price freezes aim to shield consumers and SMEs from market volatility, but falling wholesale prices are creating opportunities for proactive savings. November’s average wholesale electricity price of €94 was 20% lower than the previous year, enabling many businesses and municipalities to secure contracts below the frozen rate of €150.
This shift not only highlights a positive trend for businesses and local governments but also signals potential relief for households in the near future. As energy policy adapts to market dynamics, the interplay between tariffs, renewables and wholesale prices will remain critical to managing Poland’s energy transition effectively.
Christmas Eve public holiday awaits presidential decision
Poland’s parliament has approved a bill to designate Christmas Eve a public holiday, but its enactment hinges on President Andrzej Duda’s decision. In an unusual move, the president has sought consultations with trade unions, business associations and employers’ organizations before deciding whether to sign, veto or refer the bill to the Constitutional Tribunal.
Initially supportive of making Christmas Eve a public holiday, President Duda has expressed reservations following amendments made during parliamentary debates. One controversial addition allows for three trading Sundays in December instead of the usual two. Another amendment caps the number of working Sundays for retail employees at two, creating uncertainty about whether the bill will actually reduce their workload.
The president acknowledged the complexity of the amendments, stating: “Retail workers may feel somewhat misled by these changes.” His decision is expected by December 27, but regardless of the outcome, Christmas Eve will remain a normal working day in 2024. If signed into law, the changes will take effect next year.
Rising butter prices fuel political criticism in Poland
Butter has become an unlikely focus of Poland’s pre-Christmas political season, with opposition parties using its 20% year-on-year price hike to criticise the government. According to the Central Statistical Office (GUS), butter prices have surged, driven by reduced milk production linked to the spread of bluetongue disease among dairy cattle across Europe. While the disease has minimal impact on beef cattle, it significantly reduces milk yields, leading to lower butter supply and higher prices.
Milk prices are also rising, though the impact is primarily felt in wholesale markets. European Commission data shows an 18% increase in farmgate milk prices over the past year, while retail prices have risen by just 3%. Experts warn that unresolved outbreaks of bluetongue disease could worsen the situation in the spring, further straining milk and butter supplies.
Central European stock markets soar while Poland’s lags behind
The stock exchanges in Prague and Budapest are hitting record highs, with Prague’s index up 24% this year and Budapest’s BUX index rising 32%. In contrast, Poland’s WIG index has grown by only 4% year-to-date and remains in a downward trend since May. Analysts point to high interest rates, state-controlled companies underperforming and global capital volatility as key factors holding back Warsaw’s market, despite its position as the region’s largest exchange.
Poland forecasted to lead Central European growth through 2026
Poland is expected to outpace its regional peers with GDP growth exceeding 3% annually through 2026, according to Deloitte. Strong private consumption, diversified economic foundations, and reduced dependency on Germany’s struggling economy positions Poland as a regional leader. Migrants, particularly from Ukraine, have bolstered the labor market, offsetting demographic challenges and boosting Poland’s pension system, with foreign workers now contributing over 10% of pension payments.
Poland’s pension system gains stability thanks to migrants
Despite a decline in Polish contributors to the pension system, the influx of migrant workers has improved the financial health of Poland’s Social Insurance Institution (ZUS). Over the past year, the number of foreign contributors rose by 66,000, compensating for a 45,000 drop in Polish contributors. Pension contributions increased by 13.6% year-on-year in Q3 2023, with the system’s key coverage ratio remaining above 83%, a significant improvement from 60% in the mid-2000s.
Slovakia’s credit rating downgraded amid rising debt and political tensions
Slovakia's credit rating has been downgraded by Moody's from A2 to A3, with a stable outlook, aligning it with countries like Croatia, Slovenia and Portugal but placing it three notches below the Czech Republic and one notch below Poland. Moody’s cited growing public debt, a fiscal deficit nearing 6% of GDP in 2023 and political instability as key reasons for the downgrade. To address these issues, Slovakia plans to raise VAT from 20% to 23% and increase corporate taxes in 2025, with a goal of reducing the deficit to 3% of GDP by 2027. However, concerns about governance and strained relations with the EU weighed heavily on Moody’s decision.
The Slovak Finance Ministry criticized the downgrade, calling it “politically motivated” and “biased.” Moody’s highlighted institutional weaknesses, including judicial and media reforms, and polarized politics as additional risks complicating economic reforms.
