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Brexit from a Polish Perspective


At this point in Britain’s political mess, it is impossible to make any accurate assessments even from hour to hour as to what the EU-UK relationship will look like in as short as a month. April 12th is the next deadline for what should give us some clear view of what is happening, but I’d advise not to count on that. So the question is, as an executive of a company that depends heavily on the performance of a local economy, what does one do?

My answer, if you are fortunate enough to head a Polish company, is don’t panic.

By Jacek Baginski

My answer, if you are fortunate enough to head a Polish company, is don’t panic.

The Polish Difference

Poland is truly unique in it’s macroeconomic outlook within Europe, and while there is no doubt a hard Brexit is going to send some shock waves across the continent, Poland is relatively insulated by it’s strong fundamentals meaning such waves are likely to be a light tremor for us.

Goldman Sachs came out this week and estimated that Britain lost 2.5 percent of it’s GDP compared with the period prior to the referendum on leaving the EU three years ago. According to reports, in the case of a no-deal Brexit, which is looking increasingly likely, “European economies would be most exposed, with the potential to see losses of around 1% of real GDP.”

Outlook Remains Strong

As I have mentioned before, in this article, slower doesn’t necessarily mean worse. That is particularly true in a country like Poland, which is in the fortunate position of having enviable growth rates. In fact, Fitch just confirmed it’s A- rating of Poland which you can read about here. The agency sited Poland’s diversified economy, strong macroeconomic fundamentals, and strong banking sector. This is evidence that Poland continues to stand out among its European peers economically.

Furthermore, this is a very important election year in Poland, so the Polish government has announced programs to further support families and pensioners, which will definitely fuel consumption. In fact the government’s spending plans led Fitch in the aforementioned report to revise their predictions for growth in Poland upwards, despite an EU slowdown. The company is currently targeting Poland to converge with its peers in 2020 at a rate of 3%.

Retail Outlook

Anything that drives consumer spending translates well for companies such as ours, that essentially act as derivatives of the retail sector. EPP is in a particularly good position to benefit from this spending as we have bet heavily on not just Poland’s capitals but its regional cities as well. We received international coverage of that last summer. The extension of these programs will continue to benefit our strategy in the next year.

Jacek Baginski is the CFO of EPP, Poland’s largest owner of shopping centers.