European governments are tightening fiscal policies as budget constraints and social pressures mount, with Poland and Germany at the forefront of spending and tax reforms.
Poland’s government projected its public debt will exceed the 55% GDP threshold in 2028, triggering automatic spending cuts under national law. Finance Minister Andrzej Domański’s debt strategy for 2027–2030 forecasts net public debt rising to 57.4% of GDP in 2028, necessitating a balanced budget or measures to reduce the debt ratio. Mandatory austerity steps include freezing public-sector wage growth, capping pension indexation to inflation, and reviewing VAT and other revenue policies .
In Germany, Finance Minister Lars Klingbeil’s planned taxes on plastic and sugary drinks aim to generate €2.5 billion annually starting in mid-2027, but require hiring 1,046 new customs and IT staff at a cost of €74 million per year. Critics, including the Taxpayers’ Association, called the move bureaucratic excess, arguing it prioritizes new levies over spending reforms .
Meanwhile, Poland’s ruling PiS party proposed tax relief for entrepreneurs, including reverting health contributions to pre-2022 levels for some business owners and allowing full expensing of costs like luxury cars. Analysts estimate the measures could cost the budget up to 50 billion złoty annually, with no identified funding sources .
