Economic Weekly 41/2025, October 17, 2025

Economic uncertainty and global competition are the two most pressing challenges businesses expect to face over the next five years, according to the October edition of the Monthly Business Climate Index (MIK). Business owners indicate that the growing volatility of the external environment requires actions aimed at strengthening firms’ resilience to unpredictable changes. The highest share of respondents pointing to environmental uncertainty comes from small enterprises (66%).

Global competition poses a greater challenge for medium-sized (53%) and large firms (52%) than for micro (41%) or small enterprises (46%). Smaller firms are more likely to operate only in local markets, serve long-standing and well-known clients, and less frequently plan to expand internationally.

An ageing population is another challenge expected to shape business operations in the coming years. Nearly half of medium-sized firms (45%) anticipate difficulties in sourcing adequately skilled workers due to a shrinking working-age population. Between 2014 and 2024, Poland recorded the fastest increase in the share of people aged 65+ in the population among all EU countries. Business process automation and robotisation may help mitigate labour shortages.

The larger the firm, the more aware it is of the need to integrate sustainability and social responsibility into its business model. Large companies are more advanced in implementing ESG initiatives and better recognise their socioeconomic significance.

Around one-third of companies, regardless of size, expect that changing consumer attitudes and preferences will have a strong or very strong impact on their business in the next five years. This does not imply a disregard for the issue but rather reflects that, in the context of other more disruptive forces (such as economic volatility or intense competition), consumer preference shifts pose comparatively less risk.

One-third of medium and large firms, and around one-quarter of micro and small enterprises, anticipate that the rapid pace of technological change, including automation and AI, will significantly affect their operations. Key strategic goals include improving operational efficiency and building a competitive edge.

Only a small share of businesses believe that the six key challenges identified will not significantly affect their operations over the coming five years. The largest group of firms anticipating no impact mentioned technological change (9%) and evolving consumer attitudes (6%).

(Urszula Kłosiewicz-Górecka)

Construction has begun in Żarnowiec on what is set to become one of the largest battery energy storage facilities in the EU. The installation is planned to reach a capacity of 262 MW. For comparison, this is only slightly below the combined capacity of all large-scale (>50 kW) and prosumer (<50 kW) battery storage systems installed in Poland to date. Their total capacity stood at around 274 MW at the end of 2024, with as much as 94% accounted for by prosumer systems operating in conjunction with rooftop photovoltaic installations. Nevertheless, the capacity of battery storage systems remains significantly lower than that of conventional pumped-storage power plants; for instance, the Porąbka-Żar facility boasts nearly double the capacity, at 540 MW.

Poland is expected to see rapid development in battery energy storage systems (BESS) by the end of the decade. The main support instrument for such investments is currently the capacity market, which aims to enhance national energy security. In the three capacity market auctions held so far that included BESS projects, 4.3 GW of capacity was contracted for delivery between 2027 and 2029. The 17-year contracts provide long-term revenue certainty and facilitate access to attractive bank financing.

The role of battery storage systems will grow in parallel with the expansion of renewable energy sources (RES) in Poland’s electricity mix. While RES accounted for nearly 30% of electricity generation in 2024 on an annual basis, hourly fluctuations range from just a few percent to as much as two-thirds of national generation. These fluctuations pose a challenge to grid stability. Battery systems can support the grid by providing balancing services (e.g. frequency regulation) or storing surplus RES generation for use during peak demand periods.

(Wojciech Żelisko)

The 2025 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel was awarded to Joel Mokyr, Philippe Aghion and Peter Howitt. All three scholars are known for their contributions to macroeconomic research on economic growth. Their work is firmly grounded in the mainstream of economic thought, relying on formal macroeconomic modelling. However, it is distinguished by a nuanced approach that incorporates less orthodox elements, particularly Schumpeterian concepts of creative destruction as a key driver of development. Their models have gained broad popularity and are frequently used in policy and corporate analysis, including decisions related to R&D investments and the role of technological progress in long-term growth.

Joel Mokyr is a renowned economic historian whose research has focused on the Industrial Revolution and the reasons it occurred specifically in Western countries – a question that has intrigued economists since Adam Smith’s The Wealth of Nations. Mokyr belongs to a growing group of scholars who argue that cultural and ideological changes were fundamental to modern development. He has shown how institutions and the intellectual climate of the Enlightenment, particularly among Europe’s elites in the 17th and 18th centuries, fostered appreciation for scientific progress and interdisciplinary knowledge, enabling the successful implementation of new inventions in the economy. His work highlights that a ‘good idea’ alone is not enough: even the best ideas require a conducive institutional and cultural environment to generate growth. This includes, for example, academic freedom, protection of intellectual property, and mechanisms for knowledge transfer and challenging the status quo.

This year’s award signals a return to the concept of a knowledge-based economy. In recent years, public debate on economic issues has often centred on manufacturing, agriculture, and tangible production. However, the endogenous growth model developed by Aghion and Howitt shifts the focus back to the foundational role of knowledge accumulation and technological progress in building economic power. Their findings underscore the primacy of ideas and broad cultural progress, which precede material capital accumulation, such as machinery, financial resources or factories. This conclusion is optimistic: in this model, every country can tap into its own engine of development, namely innovation and technological advancement that boosts productivity of both capital and labour. This means putting science, innovative entrepreneurship, and investment in R&D at the centre of growth strategies.

The authors argue that the answer to contemporary crises or economic stagnation lies neither in laissez-faire policies and a diminished role of the state, nor in excessive protectionism, interventionism, or the abolition of capitalism altogether. Instead, they advocate creation of better capitalism through a deeper understanding and taking advantage of the process of creative destruction. In their view, the state should neither be strictly interventionist nor strictly libertarian, but rather act smart. It should act decisively where necessary: to curb the emergence of monopolies, counter the lobbying power of non-innovative businesses, protect workers in declining sectors, and address inequality that hampers social mobility and prevents talented individuals with promising ideas from advancing. At the same time, the state should avoid discouraging innovation by over-taxing high earners – there must be a clear reward or premium for innovation, both for firms and for individuals. It should also refrain from restricting competition or pursuing protectionist trade policies. Their vision is one of complementarity, not conflict between workers and employers, or between the state and business, which has also made them the subject of some criticism.

(Łukasz Baszczak)

The EU is finalising the preparatory phase and setting the decision-making path. The European Central Bank (EBC) is conducting preparatory work from 1 October 2023 to 31 October 2025. After this period, the Governing Council will decide on the ‘next phase’. The actual issuance of a digital euro will only be considered following the completion of the EU legislative process. At the informal ECOFIN/Eurogroup meeting in Copenhagen in September 2025, EU finance ministers agreed on a roadmap and institutional principles for setting holding limits, underlining the need for payment autonomy in light of the dominance of Visa and Mastercard. On 2 October 2025, the ECB announced its selection of suppliers for the five components of the digital euro (framework agreements concluded without financial commitments at this stage).

The EU project combines an intermediated model, offline functionality, privacy protection, and holding limits to ensure financial stability. The digital euro would operate in wallets managed by banks and payment service providers, support peer-to-peer, in-store and online payments (including offline), and coexist with cash. Holding limits and a ‘waterfall mechanism’ are designed to reduce the impact on deposits during periods of financial stress. In a stress scenario, ECB simulations indicate that outflows could reach around EUR 700 billion, but the baseline impact remains moderate. The ECB also emphasises its readiness to inject liquidity if necessary. Parallel contractual preparations are underway for technical solutions, including offline functionality (with technology partnerships in progress).

Most countries are analysing the potential introduction of central bank digital currencies. According to the Atlantic Council’s CBDC tracker, 137 countries and currency unions (accounting for approximately 98% of global GDP) are currently working on CBDC projects. Of these, 72 are in advanced stages and 49 are conducting pilot programmes. The largest and most advanced project is China’s e-CNY, which by mid-2024 had facilitated transactions worth around CNY 7 trillion. India is rolling out the e-rupee, now covering approximately 7 million users. Sweden’s e-krona pilot is testing a balance-based offline mode enabling payments without network access. In the wholesale space, Switzerland’s Project Helvetia has used CBDC for settling tokenised bonds worth around CHF 750 million and plans to extend the pilot until at least 2027.

Pilot outcomes show that the success of CBDCs hinges on functional advantage and integration with existing infrastructure. Countries that launched CBDCs without clear user benefits have experienced low adoption rates. By contrast, uptake increases when CBDCs offer offline functionality, low transaction costs, integration with national payment systems, and specific public-sector use cases (e.g. disbursing benefits). Wholesale CBDCs show more tangible results, such as atomic settlement and transaction automation, which reduce processing times, minimise risk, and improve efficiency.

(Sebastian Sajnóg)

In 2023, the difference in the share of people with basic or above-basic digital skills between urban and rural residents in Poland stood at 22 percentage points – the fourth-highest level in the European Union, following Bulgaria, Latvia, and Greece (25, 25, and 24 percentage points, respectively). In all of these countries, the overall share of individuals with basic or above-basic digital skills remained below the EU average of 55.6%.

Similarly, significant differences in the level of digitalisation among enterprises are evident depending on whether they are located in rural or urban areas. In 2024, 33% of micro, small and medium-sized enterprises (MSMEs) were classified as ‘digitally uninterested’, i.e. not engaged in digitalisation and not expressing any ambitions in this direction, according to the Ministry of Development and Technology survey. Among these, 44% had their headquarters in rural areas or towns with up to 20,000 inhabitants, compared to 38% across the entire sample. These ‘digitally uninterested’ companies typically relied on local suppliers and customers.

The headquarters of companies classified as ‘ambitious but lacking knowledge’ and ‘unconvinced of the benefits’ were also predominantly located in rural areas and small towns, 51% and 50% respectively. These two segments, like the ‘digitally uninterested’, were characterised by limited financial resources for digitalisation, low levels of employee digital competences, and weak digital and cybersecurity policies. By comparison, the three other segments of enterprises with significantly higher scores on these dimensions were much less likely to be based in small towns or rural areas – their share stood at around 30%.

The level of digitalisation – both in terms of competences and enterprise development – is lower in rural and small-town areas than in medium-sized and large urban centres. This divide stems not only from differences in the quality of local education systems or infrastructure availability, but may also reflect a dual economic structure typical of (semi-)peripheral countries. In such a structure, a narrow, modern sector concentrated in large urban areas coexists with a widespread local sector characterised by low productivity and limited access to technological capital. This pattern is also supported by recent PEI analyses (based on data from the Ministry of Development and Technology), which show that enterprises relying mainly on local rather than national or international suppliers and clients were much less likely to use artificial intelligence. This dualism is a negative phenomenon that deepens territorial disparities. Addressing it requires not only education-focused programmes but also broader actions to build local value chains around digital competences and services, promote enterprise digitalisation, and foster cooperation between local businesses and more advanced sectors of the economy.

(Filip Leśniewicz)

In Q2 2025, Poles working abroad sent a total of 5.3 billion PLN to Poland. The value of financial remittances remains very high compared to previous years, slightly above the 2022-2024 average of 5.0 billion PLN.

This amount consists of two types of transfers: funds sent by long-term migrants (2.9 billion PLN) and short-term migrants (mainly seasonal and cross-border workers), who transferred 2.4 billion PLN. A comparison of both categories over time shows that remittances from long-term migrants (labelled ‘transfers of funds’ in the chart) have remained relatively stable in recent years. Compared to Q1 2022, the value of these transfers has increased by just 0.5%.

In contrast, remittances from short-term migrants have risen significantly, particularly during the post-pandemic economic rebound between Q1 and Q2 2022. Between Q1 2022 and Q2 2025, gross earnings and the value of earnings transferred to Poland rose by 55% and 54%, respectively.

The growth rate of remittances from long-term migrants has remained unchanged. This can be attributed to a slowdown in the pace of Polish emigration abroad. In some countries such as Germany and France there is even a visible trend of return migration. Data from Germany indicate that 8,700 Polish nationals returned to Poland from that country in 2024.

(Paula Kukołowicz)