According to the preliminary results of the parliamentary elections held in Poland on Sunday, after 2 terms and 8 years of independent rule, Prawo i Spawiedliwość (Law and Justice) will have to hand over power to the opposition. This is certainly good news for foreign investors, who may have feared worsening chaos in law and taxation and, in the longer term, Poland's potential exit from the structures of the European Union.
It is worth noting that the elections were accompanied by an unprecedented turnout - as many as 73% of eligible voters took part. The previous record of 62% was held since 1989, the first free election after the fall of communism in Poland.
According to the preliminary results, although PiS won the elections to the Sejm, receiving almost 36% of the vote, it will not be able to govern on its own or form a coalition that would give it at least 231 seats in the 460-seat chamber. In this situation, the new government will be formed by a coalition of three opposition parties - the centrist Civic Coalition and Third Way and the left-wing Left.
The world of international finance has reacted positively to these results, with the zloty strengthening against the US dollar from Sunday. One of the first moves of the new government will probably be to unblock EU funds from the National Reconstruction Programme. A total of more than €35 billion is at stake, in the form of grants and soft loans from the EU fund to rebuild the economy after the pandemic. This money was blocked by Brussels because of reservations about meeting so-called milestones concerning, among other things, the rule of law - PiS tried to limit the independence of the courts, which was met with strong protests in the EU.
The new government will certainly be geared towards full cooperation in the European Union, which should finally put to rest rumours of a possible 'Polexit'. Although the Law and Justice government has never articulated this explicitly, it has used anti-EU sentiment in communications leading up to its election and has repeatedly clashed with Brussels.
Companies doing business in Poland will also surely be pleased to see an end to Law and Justice pushing through more taxes targeting entrepreneurs (such as plans to tax PRS entities) and raising the minimum wage. One thing that remains a mystery is the future policy of the Monetary Policy Council, which is responsible for interest rates and whose chairman and a large part of its composition must remain in office, and are widely known to favour the previous government camp.
