Poland’s Defence Boom: Balancing Military Readiness and Economic Growth

The Shift From Importing Arms to Domestic Manufacturing

Concealed missile systems navigate the peaceful village of Czosnów, located just a short distance north of Warsaw alongside the Vistula river. Just two years ago, the site of a hi-tech weapons facility that opened this month was a cornfield. Amid Europe’s reaction to Russian aggression and American withdrawal, this countryside location has undergone a complete transformation while Poland accelerates military spending at one of the quickest paces in the developed world.

Jim Price, the managing director of MBDA Polska, the local subsidiary of the European multinational arms group based in the UK, describes a rapid operational pivot. “Everyone has had to move twice as fast to meet the Polish needs,” Price says, noting that the former Royal Marine sees Poland shifting from importing its weapons to manufacturing them at home. When the need to defend NATO’s eastern flank became clear, the country required the ability to act quickly, prompting the creation of the new facility and new Polish jobs.

Economic Growth and Fiscal Pressures

Poland’s defence spending has reached $53bn (£39.8bn) in cash terms, representing the fourth-highest total in the European Union after Germany, France, and Italy. While attention in Warsaw focuses heavily on the risk of an imminent test of NATO resolve, government officials also point to domestic economic development as a core motive.

Inside his Warsaw office, Marcin Bosacki, Poland’s deputy foreign minister, states that Russian aggression heavily influences government plans for economic development and cooperation with EU and NATO allies. Bosacki argues that strengthening economic ties in the pursuit of military readiness benefits Polish security, defence, and the economy simultaneously, while discouraging aggression from Moscow. “The only thing which Putin understands is solidarity and power,” Bosacki says. “And so the more we are united and strong, the less likely the outcome of more aggressive Russian provocations against NATO member states is.”

This military expansion occurs against the backdrop of broader economic milestones. Annual output surpassed $1tn (£755bn) last year, and Poland maintained an annualized growth rate of 3.9% in the second quarter despite global headwinds. Living standards have risen significantly since the Solidarność movement at the Gdańsk shipyard paved the way for the nation’s transition from communism nearly four decades ago, with living standards moving from 40% of the EU average in the mid-1990s to 81% last year.

Sustainability Concerns and Sovereign Ratings

However, the current defence boom carries substantial economic costs. The rising military budget contributes to predictions that Poland will run the biggest fiscal deficit in the European Union next year, reaching 7.1% of GDP. Moody’s downgraded the country’s long-term sovereign credit rating to the lowest level since 2002 last week, citing an apparent lack of willingness to rebuild fiscal buffers.

Leszek Kąsek, a Warsaw-based economist at ING Bank, questions the long-term viability of the current trajectory. “This path is not sustainable,” Kąsek warns. “You should ask people if Poland can maintain its growth story and whether politicians will be ready to adjust?”

Diplomatic efforts continue alongside military preparations. This month, Donald Trump’s envoys Steve Witkoff and Jared Kushner held talks in Moscow with Vladimir Putin and in Kyiv with Ukrainian President Volodymyr Zelenskyy, with further negotiations scheduled in Abu Dhabi next month.