Monday Morning Update

The exit polls from Poland’s parliamentary election indicate that the incumbent right-wing populist Law and Justice party is on course to lose their majority, making it unlikely that they will form the next government. According to the Ipsos poll, the Law and Justice party is projected to secure 36.6% of the popular vote, a sizeable decrease from the 2019 elections where the party, led by Mateusz Morawiecki, won 43.6% of the popular vote, taking 235 of the lower house’s 460 seats. According to the exit poll, the Law and Justice party are estimated to take less than 200 seats, thus falling short of the 231 seats needed for a majority. While the Law and Justice party could try to form a coalition, no other Polish party have voiced that they would consider such a partnership, and it looks unlikely that they have the numbers to maintain a minority government.

Accordingly, Poland’s main opposition party led by Donald Tusk looks set to try to form a coalition which would end some eight years of the Law and Justice party’s rule. All eyes are now on whether Donald Tusk’s Civic Coalition will be able to form a majority with partnerships from the New Left and the Third Way. Following the exit polls, Tusk – who served as the Prime Minister of Poland from 2007 to 2014 and president of the European Council from 2014 to 2019 – said that “Poland wins, democracy wins”. Nonetheless, this comes as the Law and Justice party leader Jaroslaw Kaczynski said that his party had “won its third election in a row”.

Poland’s Law and Justice Party have been heavily criticised for undermining civil liberties, freedom of the press, minority rights and the rule of law. The party has also been at loggerheads with Brussels over migration and the issue of grain export subsidies coming from Ukraine with Morawiecki recently saying that Poland would stop supplying weapons to Ukraine as his party pivoted focus to “arming Poland.” Tusk on the other hand has assured the electorate that he will try to improve relations with the EU, aiming to unfreeze €36bn of EU Covid pandemic recovery funds which Brussel’s had locked due to the Law and Justice’s judicial reforms which flooded Poland’s courts with PiS sympathetic judges, undermining the judicial check and balance on power and the rule of law. The Civic Coalition has also pledged to liberalise the 2021 abortion laws that saw a near-total ban enacted.

The election marks one of the highest turnouts in Poland in decades, in what many commentators have called the most important elections in years. Indeed, election officials have indicated that the turnout was probably 72.9%, with Ipsos suggesting that more 18-29 years olds had turned-out than over 60s. As the FT notes however “analysts warned that the fragmented and poisonous politics of Poland made the exit polls potentially less reliable than in previous elections.”

All eyes continue to remain on Warsaw to see which party will try to form a government in one of the most important elections in the country in decades.

While today is a little light on tier one data, this morning’s Rightmove House Price Index has shown property prices falling by 0.8% on an annualised basis. This marked a sizeable increase from the previous print which saw a 0.4% contraction. On a monthly basis, average new seller house prices increased 0.5%, representing the lowest for this time of year since 2008.

Later today, we will see Italian CPI figures which are expected to deliver a headline print of 5.7%. This comes ahead of New Zealand’s CPI release for Q3 2023, which is expected to come in at 5.9% on an annualised basis.

The Bank of Canada will also release their Business Outlook Survey. This comes around three weeks after the central bank held rates at 5%, with policy makers citing a slowdown in the economy with Canadian output stalling over Q2 of 2023.